GASB Releases Exposure Draft Enhancing Pension Plan Disclosure Information

In order to enhance pension plan disclosure information in notes to financial statements, the Governmental Accounting Standards Board (GASB) recently released an Exposure Draft that would amend GASB Statements 25 and 27 .  If finalized, the proposed amendments would require governmental plan sponsors to:

1)      disclose the funded status of the plan as of the most recent valuation date.  Defined benefit plans would also disclose actuarial methods and key assumptions (including assumptions that change in successive years);

2)      if the required contribution of the employer (ARC) is determined using the aggregate actuarial cost method, then the funded status of the plan must also be shown using the entry age actuarial cost method;

3)      include narrative disclosures in notes to financial statements of the actuarial measurement process; and

4)      disclose any legal or contractual maximum contribution rates.

The proposed amendments are consistent with recent trends towards greater disclosure of pension plan information in financial statements. However, some governmental entities may find significant changes under the proposed standards (especially if the governmental plan uses the aggregate actuarial cost method).  The comment deadline on the Exposure Draft is February 28, 2007.  If you would like more information, please contact Mary Beth Braitman, Terry Mumford or Eric Dawes.