FASB Revises Exposure Draft on Pensions and Post-Retirement Benefits

The revised ED from FASB would require balance sheet inclusion of pension underfunded or overfunded status based on fair value of plan assets; recognize as part of other comprehensive income actuarial gains and losses plus prior service cost; record transition adjustments, whether asset or obligation, as adjustments to beginning retained earnings; measure defined benefit assets and obligations as of employer's fiscal year date and require additional disclosures regarding deferred prior service costs and actuarial gains and losses. These modifications, in RETROACTIVE form, would be required for most businesses based on fiscal year-end with calendar year companies required to modify as of December 2006. For organizations which previously reported pension plans on a different fiscal year than corporate financials; a December 2006 deadline is set for publicly-traded companies with a one-year deferral for privately-held businesses and nonprofits. A FASB Roundtable on the ED will be held on June 27.

Yet one reason that only the largest of businesses and organizations can afford to keep a presently-existing defined benefits pension plan. Also, the change may affect willingness of privately-held businesses to provide post-retirement benefits, which may not be in societal best interests.