This Statement revises employers’ disclosures about pension plans and other postretirement benefit plans. It does not change the measurement or recognition of those plans required by FASB Statements No. 87, Employers’ Accounting for Pensions, No. 88, Employers’ Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination Benefits, and No. 106, Employers’ Accounting for Postretirement Benefits Other Than Pensions. This Statement retains the disclosure requirements contained in FASB Statement No. 132, Employers’ Disclosures about Pensions and Other Postretirement Benefits, which it replaces. It requires additional disclosures to those in the original Statement 132 about the assets, obligations, cash flows, and net periodic benefit cost of defined benefit pension plans and other defined benefit postretirement plans. The required information should be provided separately for pension plans and for other postretirement benefit plans.
Reasons for Issuing This Statement
This Statement was developed in response to concerns expressed by users of financial statements about their need for more information about pension plan assets, obligations, benefit payments, contributions, and net benefit cost. Users of financial statements cited the significance of pensions for many entities and the need for more information about economic resources and obligations related to pension plans as reasons for requesting this additional information. In light of certain similarities between defined benefit pension arrangements and arrangements for other postretirement benefits, this Statement requires similar disclosures about postretirement benefits other than pensions.
Differences between This Statement and Statement 132
This Statement retains the disclosures required by Statement 132, which standardized the disclosure requirements for pensions and other postretirement benefits to the extent practicable and required additional information on changes in the benefit obligations and fair values of plan assets. Additional disclosures have been added in response to concerns expressed by users of financial statements; those disclosures include information describing the types of plan assets, investment strategy, measurement date(s), plan obligations, cash flows, and components of net periodic benefit cost recognized during interim periods. This Statement retains reduced disclosure requirements for nonpublic entities from Statement 132, and it includes reduced disclosures for certain of the new requirements.
How the Changes in This Statement Improve Financial Reporting and How the Conclusions in This Statement Relate to the Conceptual Framework
FASB Concepts Statement No. 1, Objectives of Financial Reporting by Business Enterprises, states that financial reporting should provide information about economic resources of an enterprise, claims to those resources, and the effects of transactions, events, and circumstances that change its resources and claims to those resources. This Statement, including the manner of presentation illustrated in Appendix C, results in more complete information about pension and other postretirement benefit plan assets, obligations, cash flows, and net cost and, thereby, assists users of financial statements in assessing the market risk of plan assets, the amount and timing of cash flows, and reported earnings.
FASB Concepts Statement No. 2, Qualitative Characteristics of Accounting Information, identifies relevance and reliability as the characteristics of financial information that make it useful. This Statement enhances disclosures of relevant accounting information by providing more information about the plan assets available to finance benefit payments, the obligations to pay benefits, and an entity’s obligation to...