Recently, GASB (Governmental Accounting Standards Board) approved two new pension accounting and reporting standards that will cause significant changes for how governments report defined benefit pension plans on their financial statements. This will affect all governments that provide benefits through single employer or agent plans as well as governments participating in multi-employer cost sharing plans. Historically, GASB required that governments disclose the amount of unfunded pension obligation in notes accompanying the financial statements. The obligation was not actually recognized on the financial statements themselves.
Now, under the new standards, governments will be required to report the amount of unfunded pension obligations on their balance sheets. This liability, which equals the total pension liability less the amount of plan assets formally set aside for payment of benefits, will be required to be recorded as of the reporting date.
In addition, the annual pension expense which will be based on a measurement of the annual cost of the pension benefits will be recorded on the income statement.
In the past, the annual required funding amounts was reported. This will also affect governments participating in multi-employer cost-sharing plans on a proportionate basis.
Statement No. 67 which affects reporting of pension plans that administer benefits for governments goes into effect after June 15, 2013. Statement No. 68 which relates to pension plan reporting by governments will go into effect after June 15, 2014.