FASB Update No. 2011-09

Financial Accounting Standards Board (FASB) Update

The FASB has recently released in final form Accounting Standards Update (ASU) No. 2011-09, Compensation – Retirement Benefits – Multiemployer Plans (Subtopic 715-80) which requires new accounting disclosures for employers who participate in multiemployer pension plans. The new disclosures were designed to increase transparency in multiemployer plans and are required for financial statements prepared in accordance with “Generally Accepted Accounting Principles” (GAAP) in the United States of America. The new disclosure requirements are required for public entities effective for annual periods for fiscal years ending after December 15, 2011. For nonpublic entities, the new disclosure requirements are effective for annual periods for fiscal years ending after December 15, 2012. Early adoption of the new disclosure requirements is permitted; however, the new requirements should be applied retrospectively for all periods presented. Information included in the Summary Report issued by defined benefit Pension Plans pursuant to Section 104(d) of the Employee Retirement Income Security Act of 1974 (ERISA), as amended by the Pension Protection Act of 2006, and the Plan’s Form 5500 should be helpful in complying with these new disclosure requirements.

In summary, employers who participate in multiemployer pension plans will be required to disclose 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.

For the full text of the FASB ASU, click here.