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Business and Policy Areas
Business and Policy Areas

FASB to Reconsider Accounting for Pensions and Other Postretirement Benefits

November 16, 2005

On November 10, the Financial Accounting Standards Board added a project to its agenda to reconsider guidance in Statement No. 87, Employers’ Accounting for Pensions, and Statement No. 106, Employers ’ Accounting for Postretirement Benefits Other Than Pensions. The FASB agenda addition reflects the board’s commitment to ensure that its standards address current accounting issues and changing business practices. Consistent with its effort toward international convergence, FASB expects to work with the International Accounting Standards Board.

Because the accounting and reporting issues surrounding pensions and other postretirement benefits involve many fundamental areas of accounting and also affect complex funding and tax rules, FASB will conduct the project in two phases. The objective of the first phase is to require measurement information about pension and other postretirement plans on the balance sheet rather than solely in the footnotes. The more comprehensive second phase will address the following issues:

  • how to best recognize and display in earnings and other comprehensive income the various elements that affect the cost of providing postretirement benefits;
  • how to best measure the obligation, in particular the obligations under plans with lump-sum settlement options;
  • whether more or different guidance should be provided regarding measurement assumptions; and 
  • whether postretirement benefit trusts should be consolidated by the plan sponsor. 

Due dates have not been specified. NACUBO will continue to track this agenda item and keep members informed.

Additional and information and updates are available on FASB's Web site. NACUBO contact: Sue Menditto, director, accounting policy.