NEWS RELEASE 12/15/06
GASB Proposal Would Enhance Disclosure Requirements for Governmental Pension Plans
Norwalk, CT, December 15, 2006The GASB today issued a proposal that would bring current pension disclosure requirements for governments and governmental pension plans into line with those recently issued for other post-employment benefits, or OPEB. The changes, outlined in an Exposure Draft of a proposed Statement on pension disclosures, would enhance accountability and improve the decision usefulness of financial information provided to citizens, elected representatives, investors, and other financial statement users about pensions in a number of areas.
Specifically, today's proposed Statement would amend GASB Statements No. 25, Financial Reporting for Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans, and No. 27, Accounting for Pensions by State and Local Governmental Employers, by requiring:
- Disclosure of the current funded status of the plan as of the most recent actuarial valuation date in the notes to the financial statements of pension plans and certain employer governments to be presented in addition to funded status data currently presented as required supplementary information (RSI)
- Disclosure by governments that use the aggregate actuarial cost method of the funded status and present a multiyear schedule of funding progress using the entry age actuarial cost method as a surrogate; these governments currently do not provide this information
- Additional note disclosures about actuarial methods and assumptions used in the valuations underlying information reported about the annual required contribution and funded status of the pension plan
- Disclosure by governments participating in cost-sharing pension plans of how the contractually required contribution rate is determined
- Presentation by governments in cost-sharing plans of the required schedule of funding progress if the plan does not issue a GAAP-compliant report that includes RSI or if the plan is not included in a publicly available financial report of another entity.
"Today's proposal reflects our commitment to ensuring that users of governmental financial statements have access to the highest-quality information available to make their decisions," said Robert Attmore, GASB chairman. "The Exposure Draft would accomplish this by making the improved disclosures introduced in the OPEB standards applicable to all retirement benefits."
Chairman Attmore also noted that the GASB is concurrently conducting a broader research project to determine whether existing accounting standards for government pensions have been effective. Based upon constituent feedback received and analysis conducted during that research, the Board will determine at a future date whether further changes to the current pension standards are necessary.
The requirements of today's proposed Statement would be effective for periods beginning after June 15, 2007, with early implementation encouraged.
A copy of the proposal may be downloaded from the GASB's website at www.gasb.org.
The Board is seeking written comments on the proposal by February 28, 2007. Parties interested in providing input on today's proposal entitled, Pension Disclosures (an amendment of GASB Statements No. 25 and No. 27), may use an Internet-based comment form, or may submit their comments by email to email@example.com or via regular mail to:
Governmental Accounting Standards Board
401 Merritt 7
PO Box 5116
Norwalk, CT 06856-5116
About the Governmental Accounting Standards Board
The GASB is the independent, not-for-profit organization formed in 1984 that establishes and improves financial accounting and reporting standards for state and local governments. Its seven members are drawn from the Board's diverse constituency, including preparers and auditors of government financial statements, users of those statements and members of the academic community. More information about the GASB can be found at its website www.gasb.org.