The US Governmental Accounting Standards Board
(GASB) has issued two exposure drafts to amend existing
pension reporting standards.
The drafts aim to improve state and
local government’s financial reporting of pensions by proposing a
more transparent way to calculate and report costs and
obligations.
“Users of state and local government financial
reports have told the GASB that current standards do not provide
enough information to adequately understand the cost and the
liability for benefits promised to active and retired
employees,” GASB chairman Robert Attmore explained.
In the first draft, Pensions Exposure
Draft, the GASB proposes to introduce a net
pension liability, which is the difference between the total
pension liability and net assets set aside in a qualified trust to
pay benefits to current employees, retirees, and their
beneficiaries.
Other proposals includes: Immediate
recognition of more components of pension expense; use of a
discount rate; a single actuarial cost allocation method; and more
extensive note disclosures and supplementary information.
The GASB said the amendments also address
situations in which another entity contributes to a government’s
pension plan on behalf of the employer and addresses accounting and
financial reporting for employers providing pensions through
defined contribution plans.
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By GlobalDataThe second, Pension Plan Exposure
Draft, addresses financial reporting for plans that are
administered through qualified trusts. It outlines the basic
framework for the separately issued financial reports of
defined benefit pension plans and also details proposed
note disclosure requirements for defined contribution
pension plans.
The deadline for written comment is 30
September.
The GASB will also host three public hearings
on the drafts on 3, 13 and 20 October as well as three user
discussion forums on 4, 14 and 21 October.
