FASB Disclosure Requirements: Employer Participation in Multiemployer Plan

International Foundation’s Comments to FASB

International Foundation submitted comments to FASB on October 29 regarding the Exposure Draft. The submission identifies factors that the Multiemployer Plan community believes are important in evaluating the appropriateness of the FASB Exposure Draft regarding disclosures for employer’s participation in a Multiemployer Plan. The Foundation has received comments from its membership involved with Multiemployer Plans regarding the Exposure Draft expressing concerns with the nature of certain disclosures and reported several of those points in its submission.

FASB Issues Accounting Standards Update to Improve Employer Disclosures for Multiemployer Plans

The U.S. Financial Accounting Standards Board (FASB) issued Accounting Standards Update No.2011-09, Compensation--Retirement Benefits--Multiemployer Plans (Subtopic 715-80): Disclosures about an Employer's Participation in a Multiemployer Plan (Posted 9/28/11)

As announced in July, the new disclosures include:

  • The amount of employer contributions made to each significant plan and to all plans in the aggregate. 
  • An indication of whether the employer’s contributions represent more than five percent of total contributions to the plan. 
  • An indication of which plans, if any, are subject to a funding improvement plan. 
  • The expiration date(s) of the collective bargaining agreement(s) and any minimum funding arrangements. 
  • The most recent certified funded status of the plan, as determined by the plan’s so-called “zone status,” which is required by the Pension Protection Act of 2006. If the “zone status” is not available, an employer will be required to disclose whether the plan is:
    • Less than 65 percent funded 
    • Between 65 percent and 80 percent funded
    • At least 80 percent funded.
  • A description of the nature and effect of any changes affecting comparability for each period in which a statement of income is presented.

Prior to the issuance of this Update, employers were required to disclose only their total contributions to all multiemployer plans in which they participate.

For public entities, the enhanced disclosures will be required for fiscal years ending after December 15, 2011. For nonpublic entities, the enhanced disclosures will be required for fiscal years ending after December 15, 2012. Early application will be permitted.

The September 2011 FASB in Focus provides an overview of the main provisions in the Update.

Frequently Asked Questions and Worksheet:

Answers to Frequently Asked Questions Pertaining to the Financial Accounting Standards Board (FASB) Standard 715-80, Disclosure about an Employer’s Participation in a Multiemployer Plan (including a FASB Disclosure Table Excel Worksheet and Guidance Memo), Mechanical Contractors Association of America (New)

These frequently-asked questions (FAQs) have been developed for employers that contribute to multiemployer defined benefit pension plans and offer guidance on how to comply with FASB's financial statement disclosure requirements. An Excel worksheet and instructions are included.

Background:

FASB Improves Employer Disclosures for Multiemployer Pension Plan (Press Release, 7/27/11)  The U.S. Financial Accounting Standards Board (FASB) approved a revised accounting standard for disclosure of employer obligations to multiemployer pension plans.

FASB Board Meeting on the Disclosure of Employer Participation in a Multiemployer Plan Held July 27
The U.S. Financial Accounting Standards Board (FASB) will hold an open Board Meeting on Wednesday July 2th The discussion focused on qualitative disclosures and any remaining issues related to an employer’s participation in a multiemployer plan.  (Archived Webcast available.)
Board Meeting Handout
(Updated 7/27/11)

FASB issued an Exposure Draft, Proposed Accounting Standards Update—Compensation—Retirement Benefits—Multiemployer Plans (Subtopic 715-80): Disclosure about an Employer’s Participation in a Multiemployer Plan. The purpose is to require additional information on employer commitments and risk involved with participation in multiemployer pension and other postretirement benefit plans. Comments are due November 1. (Posted 9/1/10)

The proposal includes annual disclosure of:

  • Total assets and accumulated plan benefit obligations
  • Quantitative information about employer participation
  • Description of contractual arrangements between the employer and the plan, including duration, contribution rates and minimum funding arrangements
  • Expected contributions for the next annual period
  • Known trends in future contributions
  • Amount required to be paid upon plan withdrawal
  • Description of adopted funding improvements and effect on the employer.

Proposed effective dates differ for public and nonpublic companies.

Additional FASB information

Comment Letters - Link to comment letters already submitted.
FASB Project Update Page
FASB In Focus - summary of the proposed Accounting Standards Update
FASB Podcast (September 2010)


Analysis


New Disclosures for Multiemployer Pension Plans Requried for Non-public Entities, HRS Insight, 4/26/13 (New)

FASB Issues Accounting Standard on Disclosures for Employers that Contribute Multiemployer Plans, Segal, 10/11

FASB Issues ASU on an Employer's Participation in a Multiemployer Benefit Plana
Deloitte, 9/23/11

FASB Decides on Changes to Disclosures for Employers that Contribute to
Multiemployer Plans, Segal, 7/29/11

FASB Approves Revised Disclosures for Multiemployer Pension Plans; Effective for Public Companies in 2011, PricewaterhouseCoopers, 8/3/2011

FASB Approves Changes to GAAP, Enhancing Disclosures of Participation in Multiemployer Defined Benefit Pension Plans, Proskauer Rose, 7/28/11

FASB Modifies Proposed Multiemployer Plan Participation Disclosures 
Morgan, Lewis & Bockius, 6/13/11

FASB Tentatively Changes Course on Proposed Disclosures for Employers That Contribute to Multiemployer Plans Segal, 6/6/11

FASB Disclosure Rules Still Taking Shape
Benefits Magazine, 3/20/11

FASB Postpones Accounting Changes on Multiemployer-related Disclosures,
Segal, 11/11/10

FASB Proposes to Expand Disclosures for All Multiemployer Plan Participating Employers, Milliman, 10/10

Accounting Considerations Regarding Notices of Increased Contributions to Multiemployer Pension and Other Postretirement Benefit Plans and Proposed Disclosures for Employers That Participate in Such Plans [PDF]
PricewaterhouseCoopers, 9/21/10

FASB Proposes Expanded Disclosures for Multiemployer Postretirement Plans [PDF]
KPMG, 9/10

FASB Exposure Draft Proposes Employers Contributing to Multiemployer Pension Plans Disclose New Information in Their Financial Statements [PDF]
Segal Group, Inc.,  9/10

Information is available on another FASB project related to employers who contribute to multiemployer plans. The exposure draft, Contingencies (Topic 450): Disclosure of Certain Loss Contingencies, includes a subtopic requiring additional disclosures for multiemployer plan withdrawal liability.