GASB Issues Final Rules Governing Reporting for Postemployment Benefits Other Than Pensions
The Governmental Accounting Standards Board (GASB) has issued GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions (GASB 75). For reporting periods beginning after June 15, 2017, governments will recognize their unfunded accrued other postemployment benefits (OPEB) obligation on the face of their financial statements. OPEB comprises mostly postemployment health care benefits and can represent a very significant liability for many state and local governments, especially if the government has set aside few assets to pay for those benefits. OPEB also may include death benefits, life insurance, disability and long-term care.
The new reporting requirements on OPEB parallel the changes for pension plan accounting included in Statement No. 67, Financial Reporting for Pension Plans—An Amendment of GASB Statement No. 25, and Statement No. 68, Accounting and Financial Reporting for Pensions—An Amendment of GASB Statement No. 27. Together, the standards provide consistent and comprehensive guidance to state and local governments for all postemployment benefits. State and local governments currently are implementing the new pension standards, and financial statement users soon should have a more thorough understanding of the cost of significant pension and OPEB obligations.
In addition to looking at GASB 75, this paper provides a brief overview of Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, and Statement No. 73, Accounting and Financial Reporting for Pensions and Related Assets That Are Not Within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67 and 68. Although Statement 75 is effective for periods beginning after June 15, 2017, earlier application is encouraged.