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CCH® PENSION — 05/14/10

FASB begins project on disclosures of employer involvement in multiemployer plans

At its April 14, 2010 meeting, the Financial Accounting Standards Board (FASB) has decided that employers must disclose both quantitative and qualitative information about their participation in a multiemployer plan. The information to be contained in the proposed disclosures will largely come from the agreement between the employer and the multiemployer plan. Additionally, some of the disclosure requirements will be based on information that can be obtained by the employer from the plan under the requirements of the Pension Protection Act of 2006 (PPA; P.L. 109-280). The FASB agreed to make the disclosure requirements effective prospectively for fiscal years ending after December 15, 2010. The staff for the FASB was directed to begin drafting a proposed Accounting Standards Update to be issued in the second quarter of 2010, followed by a 60-day comment period. A final update will be issued early in the fourth quarter of 2010.

This project was initiated by the FASB in response to concerns raised about the lack of information in the financial statements, beyond the contributions made, about an employer's participation in a multiemployer plan. Additionally, several users have published reports highlighting these concerns, including the potential for increases in contributions as a result of plans being underfunded. The FASB noted that the funded status of many of these plans deteriorated significantly during the financial crisis of 2008 when plan asset values dropped significantly.

According to the FASB, the objective of this project is to enhance the disclosure requirements about an employer's participation in a multiemployer plan under FASB Accounting Standards Codification Subtopic 715-80 (originally issued as FASB Statements No. 87, Employer's Accounting for Pensions, No. 106, Employers' Accounting for Postretirement Benefits Other Than Pensions, and No. 132 (revised 2003), Employers' Disclosures about Pensions and Other Postretirement Benefits).

Source: FASB, Summary of Board Decisions - FASB Board Meeting, April 14, 2010.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.

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