Public Sector Pension Plans & Other Postemployment Benefits (OPEBs)

Pension Plan Accounting & Financial Reporting

In mid-2012, the Governmental Accounting Standards Board (GASB) issued Statements No. 67 and No. 68 to improve the usefulness of financial reports by state and local pension plans and pension plan employers. These statements relate to pension plans administered through trusts or equivalent arrangements that meet certain criteria.

For defined benefit pension plans, Statement No. 67, Financial Reporting for Pension Plans an amendment of GASB Statement No. 25 establishes standards of financial reporting for separately issued pension plan reports. This statement became effective for financial statements for fiscal years beginning after June 15, 2013.

Statement No. 68, Accounting and Financial Reporting for Pensions – an amendment of GASB Statement No. 27, establishes standards for measuring and recognizing pension expenditures and the entire net pension liability or proportionate share thereof, congruent with the plan’s activities of determining pension benefits, accumulating and managing assets dedicated for pensions, and paying benefits to plan members as they come due. This statement became effective for fiscal years beginning after June 15, 2014.

Since the effective date of these two statements, GASB has issued several standards amending the statements or providing implementation guidance on the practice issues listed below. Statement No. 78 narrows the scope and applicability of GASB 68 to exclude pensions provided to employees of state or local governmental employers through a cost-sharing, multiple-employer defined benefit pension plan that meets certain criteria.  GASB’s Implementation Guide No. 2016-1, Implementation Guidance Update—2016 provides guidance to clarify, explain or elaborate on recent GASB statements, including pension and Other Postemployment Benefits (OPEB) statements.

Other Postemployment Benefits (OPEB) Accounting & Financial Reporting

In 2015, GASB issued two standards designed to provide financial statement users with a more comprehensive measure of the needed resources to make good on OPEBs state and local governments have promised, along with the annual costs related to those promises. The statements bring advances in accounting and financial reporting for OPEBs similar to those associated with the board’s pension standards, established in 2012, and significantly changes how governments calculate and report the annual costs and long-term obligations related to OPEBs. Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, addresses financial reporting by plans that administer OPEB benefits. Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, addresses accounting and financial reporting by governments that provide OPEBs to their employees or employees of other governmental units.

The provisions in GASB 74 are effective for financial statements for fiscal years beginning after June 15, 2016. The provisions in GASB 75 are effective for fiscal years beginning after June 15, 2017. Earlier application is encouraged.

GASB plans to issue implementation guidance in 2017 to assist OPEB plans, employers and governmental nonemployer contributing entities as they address implementation issues associated with GASB 74 and 75. This project will result in the issuance of two Implementation Guides—one focused on plan implementation issues and one focused on additional issues related to employer-specific requirements.

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