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Business and Policy Areas
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GASB ED Addresses Pension Disclosures

December 15, 2006

On December 15, 2006, the GASB issued an exposure draft that would make the improved disclosures introduced in the OPEB standards (GASB standards 43 and 45) applicable to all retirement benefits. The changes in the ED would amend GASB Statements No. 25, “Financial Reporting for Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans," and No. 27, “Accounting for Pensions by State and Local Governmental Employers,” by requiring:

• disclosure of the current funded status of the plan as of the most recent actuarial valuation date in the notes to the financial statements of pension plans and certain employer governments to be presented in addition to funded status data currently presented as required supplementary information (RSI);
• disclosure by governments that use the aggregate actuarial cost method of the funded status and present a multiyear schedule of funding progress, using the entry age actuarial cost method as a surrogate; these governments currently do not provide this information;
• additional note disclosures about actuarial methods and assumptions used in the valuations underlying information reported about the annual required contribution and funded status of the pension plan;
• disclosure by governments participating in cost-sharing pension plans of how the contractually required contribution rate is determined; and
• presentation by governments in cost-sharing plans of the required schedule of funding progress if the plan does not issue a GAAP-compliant report that includes RSI or if the plan is not included in a publicly available financial report of another entity.

The requirements of the proposed statement would be effective for periods beginning after June 15, 2007 (fiscal 2008 for most public higher education institutions), with early implementation encouraged. A copy of the proposal may be downloaded from the GASB's Web site. The GASB is seeking written comments on the ED by February 28, 2007.

NACUBO encourages public institutions to read and respond to the ED by the comment deadline. NACUBO plans to comment based on input from NACUBO’s Accounting Principles Council, but encourages all members to provide insights for contribution to the comment letter.  Members with feedback on the ED should contact Sue Menditto, director, accounting policy.