March 2010
FASB to Address Enhanced Disclosures for Employers
Participating in Multiemployer Plans
Jerry Henderson
On Wednesday, March 17, 2010, the Financial Accounting Standards Board (FASB) made a previously unannounced, though not unexpected, move to add a project to its agenda to enhance the disclosure requirements for employers participating in a multiemployer plan. These efforts will be an expansion of existing disclosure requirements under Accounting Standards Codification Subtopic 715-80 (originally FAS 87, FAS 106 and FAS 132(R)).
FASB plans to move quickly on this project—issuing a proposed standard some time this summer and a final standard before year-end. The board has not indicated when the disclosures would take effect.
FASB is addressing this topic because of constituents’ concerns about perceived deficiencies in current disclosures for mutliemployer plans. This includes the lack of disclosure about potential contribution increases as a result of underfunded plans.
FASB also indicates the significant deterioration in funding for multiemployer plans is driving these concerns.1
For the full text of the FASB press release, please click here.
For more information on this issue or related matters, please consult your BKD advisor.
1The Pension Protection Act of 2006 categorizes plans according to their funded status as being either Green Zone (generally greater than 80 percent funded), Yellow Zone (generally less than 80 percent funded but more than 65 percent funded) or Red Zone (generally 65 percent or lower in funded status).
In a recent presentation made by staff members of The Associated General Contractors of America, they cite statistics that show that by 2009, only 20 percent of all pensions were in the Green Zone, while 38 percent were in the Yellow Zone and 42 percent were in the Red Zone.
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