A new accounting standard will require employers to disclose more information about their contributions to multi-employer pension plans. It will be a significant change for employers and plan sponsors in heavily unionized industries such as construction.
The new disclosures include:
- The amount of employer contributions made to each significant multi-employer plan and the total made to all plans.
- An indication of whether the employer’s contributions represent more than 5 percent of the total contributions to the plan.
- An indication of which plans are subject to a funding improvement plan.
- The expiration dates of any collective bargaining agreements and minimum funding arrangements.
- The most recent certified funded status of the plan, as determined by the plan’s “zone status.” If the “zone status” is not available, the employer must disclose whether the plan is less than 65 percent funded, between 65 and 80 percent funded, or at least 80 percent funded.
- A description of the nature and effect of any changes that affect the comparability for each period in which a statement of income is presented.
Previously, employers were required to disclose only their total contributions to all of the multi-employer plans in which they participated. The new standard, which was released by the Financial Accounting Standards Board last fall, will provide more information about the total commitment and risk associated with each multi-employer plan.
For private companies, the disclosures will be required for years ending after Dec. 15, 2012. For public companies, they will be required for years ending after Dec. 15, 2011.