Statement No. 5
Disclosure of Pension Information by Public Employee Retirement Systems and State and Local Governmental Employers
(Issued 11/86)
Summary
This Statement establishes standards for disclosure of pension information by public employee retirement systems (PERS) and state and local governmental employers in notes to financial statements and in required supplementary information. It standardizes pension disclosure guidance by superseding the pension disclosure requirements of paragraph 9 of GASB Statement No. 1, Authoritative Status of NCGA Pronouncements and AICPA Industry Audit Guide.
The disclosures required by this Statement are intended to provide information needed to assess (a) funding status of a PERS on a going-concern basis, (b) progress made in accumulating sufficient assets to pay benefits when due, and (c) whether employers are making actuarially determined contributions.
Disclosures are required both in financial reports issued by PERS and in financial reports issued by employers, including those that do not fund their pension obligations. In addition to disclosures about plan provisions, actuarially determined contribution requirements, contributions actually made, and significant actuarial assumptions, this Statement requires the computation and disclosure of a standardized measure of the pension obligation. That measure, which may differ from that produced by the actuarial funding method used to determine contribution requirements, is the actuarial present value (APV) of credited projected benefits prorated on service: it considers both salary progression and step-rate benefits. It is referred to in this Statement as the "pension benefit obligation." An actuarial valuation to calculate this measure should be made at least once every two years, with an update in years when a full valuation is not performed.
Ten-year trend information should also be presented as required supplementary information. This information includes comparisons of (a) net assets available for benefits to the pension benefit obligation, (b) unfunded pension benefit obligation to annual covered payroll, and (c) revenues by source to expenses by type. Employers may make reference to the availability of 10-year trend information in publicly available PERS reports or in their own comprehensive annual financial reports (CAFR) rather than present the information with their general purpose financial statements (GPFS).
For purposes of this Statement, PERS are categorized as single-employer, agent multiple-employer, and cost-sharing multiple-employer. Employers are required to disclose only summary information about their participation in cost-sharing multiple-employer PERS.
Small PERS and small employers (as defined in the Statement) may disclose the actuarial accrued liability developed from certain specified actuarial funding methods, instead of the standardized measure of the pension obligation required of larger entities. These smaller entities are also exempted from the requirement for actuarial updates.
Guidance is also provided on disclosure of information on defined contribution pension plans.
Unless otherwise specified, pronouncements of the GASB apply to financial reports of all state and local governmental entities, including public benefit corporations and authorities, public employee retirement systems, and governmental utilities, hospitals, colleges, and universities.