FASB Issues New Multiemployer Plan Disclosure Standard; Update Represents Victory for AGC
On September 21, the Financial Accounting Standards Board (FASB)
issued an Accounting Standards Update
to require employers that participate in multiemployer pension plans to provide additional quantitative and qualitative disclosures in their financial statements. The AGC’s Tax and Fiscal Affairs Committee and the Construction Industry FASB Coalition, of which AGC was an active member, was instrumental in getting the most dangerous provisions of the originally proposed standard removed.
The new disclosures include the following:
- The significant multiemployer plans in which an employer participates, including the plan names and identifying number.
- The level of an employer’s participation in the significant multiemployer plans, including the employer’s contributions made to the plans and an indication of whether the employer’s contributions represent more than 5 percent of the total contributions made to the plan by all contributing employers.
- The financial health of the significant multiemployer plans, including an indication of the funded status, whether funding improvement plans are pending or implemented, and whether the plan has imposed surcharges on the contributions to the plan.
- The nature of the employer commitments to the plan, including when the collective bargaining agreements that require contributions to the significant plans are set to expire and whether those agreements require minimum contributions to be made to the plans.
Users of financial statements would be able to use the Employer Identification Number, the plan name, and, if applicable, the plan number, to obtain additional information, including the funded status of the plan(s), from sources outside the financial statements, such as the plan’s annual report (Form 5500).
Employers are also required to make additional disclosures about the plans that otherwise may not be available publicly, including the following:
- A description of the nature of the plan benefits.
- A qualitative description of the extent to which the employer could be responsible for the obligations of the plan, including benefits earned by employees during employment with another employer.
- Other quantitative information, to the extent available, as of the most recent date available, to help users understand the financial information about the plan, such as total plan assets, actuarial present value of accumulated plan benefits, and total contributions received by the plan.
For public entities, the enhanced disclosures are required in fiscal years ending after Dec. 15, 2011. For nonpublic entities, the enhanced disclosures are required in fiscal years ending after Dec. 15, 2012.