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Business and Policy Areas
Business and Policy Areas

New GASB Guidance Addresses Non-State Defined Benefit Pensions

January 8, 2016

During the implementation of Statement 68, “Accounting and Financial Reporting for Pensions,” the Governmental Accounting Standards Board (GASB) received numerous technical inquiries about the treatment of certain federal, civil service, and private sector defined benefit pension plans that some employees participate in.

In higher education, public land-grant institutions tend to have employees who are covered by a federal or civil service retirement system. Other public higher education institutions have reported having employees who participate in various union- sponsored pension plans. GASB’s ongoing position had been that the requirements of Statement 68 apply to employees who participate in another than state or local government sponsored plans, even though such plans do not need to comply with GASB Statement 67, “Financial Reporting for Pension Plans—an amendment of GASB Statement 25.”

In July 2015, GASB decided to address the issue of other types of multiple-employer plans predominantly because of the inability of employers to obtain measurement and other information needed to comply with the requirements of Statement 68. The Board concluded that a separate standard—Statement 78, “Pensions Provided Through Certain Multiple-Employer Defined Benefit Pension Plans”—would provide specific guidance for employers with employees who participate in other multiple-employer plans.

Statement 78 guidance should be followed (and Statement 68 not followed) when the multiple-employer cost sharing defined benefit pension plan:

  • Is not a state or local government plan.
  • Is used to provide defined benefit pensions both to employees of state or local governmental employers and to employees of employers that are not state or local governmental employers.
  • Does not have predominant state or local governmental employers that provide pensions through the pension plan.

The requirements of Statement 78 include the following:

  • Recognition of pension expense equal to the employer’s required contributions to the plan for the reporting period.
  • Recognition of a liability for any unpaid required contributions to the plan for the reporting period.
  • Note disclosures that cover:
  1. The plan name and administrator
  2. Any publicly available financial report information
  3. A description of benefit terms.
  • Additional information about any reported liabilities. Required supplementary information that includes:
  1. A schedule of the employer’s required contributions for each of the 10 most recent reporting years.
  2. Notes on significant factors (if any) that impacted reported contribution trends.

The requirements of Statement 78 are effective in FY15. Any changes adopted to conform to the provisions of Statement 78 in FY16 would be retroactively applied.


Sue Menditto
Director, Accounting Policy