Proposed Presentation & Disclosure Updates for Defined Benefit Plan Sponsors
As part of its overarching disclosure framework project, the Financial Accounting Standards Board (FASB) evaluated the effectiveness of existing disclosure requirements for employers that sponsor defined benefit pension or other postretirement benefit plans. FASB’s exposure draft, Compensation – Retirement Benefits – Defined Benefit Plans – General (Subtopic 715-20): Changes to the Disclosure Requirements for Defined Benefit Plans, proposes five new disclosures and removes seven existing ones, both qualitative and quantitative. Certain proposed amendments are specific to private companies, not-for-profit organizations and employee benefit plans. These include extension of the requirement to disclose the effects of a one-percentage-point change in assumed health care cost trend rates to these entities and removal of the requirement to reconcile plan assets measured on a recurring basis in Level 3 of the fair value hierarchy. Instead, these entities would be required to disclose the amounts of transfers into and out of Level 3 of the fair value hierarchy and purchase of Level 3 plan assets. The table below offers a summary of proposed removals and additions.
FASB is seeking feedback on the proposal, including comments on the cost of implementing the new standard and the increase or elimination of decision-useful information. Comments are due by April 25, 2016.