The U.S. Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2011-09, Compensation—Retirement Benefits—Multiemployer Plans (Subtopic 715-80): Disclosures about an Employer’s Participation in a Multiemployer Plan, on Sept. 21, 2011. The Update is intended to promote the release of more information about an employer’s financial obligations to multiemployer defined benefit pension plans.
The new rules apply for public companies' fiscal years ending after Dec. 15, 2011; others get a one-year delay. Early adoption is permitted.
Multiemployer or "Taft-Hartley" pension plans commonly are used by an employer to provide benefits to union employees who may work for many employers during their working life, thereby enabling them to accrue benefits in a single pension plan for their retirement.
The Update is in response to "concerns regarding the poor funding levels of many defined benefit multiemployer pension plans, as well as the lack of information on these plans in financial filings," according to an analysis by PricewaterhouseCoopers.
As announced by the FASB in July 2011, the new disclosures include:
• The amount of employer contributions made to each significant plan and to all plans in the aggregate.
• An indication of whether the employer’s contributions represent more than 5 percent of total contributions to the plan.
• An indication of which plans, if any, are subject to a funding improvement plan.
• The expiration dates of the collective bargaining agreements and any minimum funding arrangements.
• The most recent certified funded status of the plan, as determined by the plan’s so-called “zone status,” which is required by the Pension Protection Act.
If the “zone status” is not available, an employer will be required to disclose whether the plan is:
• Less than 65 percent funded.
• Between 65 percent and 80 percent funded.
• At least 80 percent funded.
• A description of the nature and effect of any changes affecting comparability for each period in which a statement of income is presented.
Prior to the issuance of the Update, employers were required to disclose only their total contributions to all multiemployer plans in which they participate.
The September 2011 FASB in Focus provides an overview of the main provisions in the Update.
Multiemployer Defined Benefit Plans: Only 20% Rate 'Safe' Funded Status, SHRM Online Benefits Discipline, May 2009
Multiemployer Pension Plans: Proposed IRS, PBGC Rules Shine Spotlight on Funding Liabilities, SHRM Online Benefits Discipline, March 2008
SHRM Online Benefits Discipline
SHRM Online Retirement Plans Resource Page