GASB Issues Guidance, Proposals Applicable to State and Local Plans

The Governmental Accounting Standards Board (GASB) has issued guidance and a proposal that would be applicable to state and local pension plans. The guidance clarifies how earlier guidance on accounting and financial reporting rules for pensions apply to state and local plans, and the proposal concerns what constitutes fiduciary activities for financial reporting purposes, the recognition of liabilities to beneficiaries, and how fiduciary activities should be reported.

Guidance
Statement 78, “Pensions Provided through Certain Multiple-Employer Defined Benefit Pension Plans,” was issued in December and addresses the scope and applicability of Statement No. 68, “Accounting and Financial Reporting for Pensions.” The GASB issued Statement 68 in June 2012 to improve accounting and financial reporting by state and local governments for pensions and to improve information provided by state and local governmental employers about financial support for pensions that is provided by other entities.

Statement 78 amends the scope and applicability of Statement 68 to exclude pensions provided to employees of state or local governmental employers through a cost-sharing multiple-employer defined benefit pension plan
that:

• is not a state or local governmental pension plan;

• is used to provide pensions both to employees of state or local governmental employers and to employees of employers that are not state or local governmental employers; and

• has no predominant state or local governmental employer (either individually or collectively with other state or local governmental employers that provide pensions through the pension plan).

Statement 78 establishes requirements for:

• recognition and measurement of pension expense, expenditures and liabilities;

• noting disclosures of descriptive information about the plan, benefit terms, and contribution terms; and

• supplementary information presenting required contribution amounts for the past 10 fiscal years.

Statement No. 78 is effective for reporting periods beginning after Dec.15, 2015.

Proposal

The Exposure Draft “Fiduciary Activities,” issued Dec. 8, would establish guidance regarding what constitutes fiduciary activities for financial reporting purposes, the recognition of liabilities to beneficiaries, and how fiduciary activities should be reported. Its central objective is to enhance the consistency and comparability of fiduciary activity reporting by state and local governments. The proposal also is intended to improve the usefulness of fiduciary activity information, primarily for assessing the accountability of governments in their roles as fiduciaries. It would apply to all state and local governments.

The GASB invites public comment on the exposure draft. They are due by March 31, 2016 and should be addressed to the Director of Research and Technical Activities, Project No. 3-13E, and emailed to [email protected] or mailed to the Governmental Accounting Standards Board, 401 Merritt 7, PO Box 5116, Norwalk, CT 06856-5116.

A public hearing concerning the proposed Exposure Draft on Fiduciary Activities is scheduled for April 21, 2016, beginning at 8:55 a.m. Central Time at the Hyatt Rosemont Hotel, 6350 N. River Road, Rosemont, Ill. Interested individuals or organizations may participate in the hearing in person or by telephone. Details regarding participation will be provided after the GASB receives a notice of intent to participate. The deadline for written notice of intent to participate in the public hearing is March 31, 2016.

For more on GASB actions relevant to retirement plans, click here.