New Multiemployer Pension Plan Disclosure Requirements and Your Company

Agribusiness

By: Mark Rodruck, CPA, Partner|  email

A multiemployer pension plan is used by an employer to provide a benefit to their employees in a plan that is shared with multiple employers, usually in similar industries. Under previous accounting principles, employers were only required to disclose their contributions to the plan without disclosing the funded status of the plan.

With ASC No. 2011-09, Disclosures about an Employer’s Participation in a Multiemployer Plan, the Financial Accounting Standards Board (FASB) will ensure that financial statement users will have more information regarding the employer’s pension commitments and the financial health of the plans.

The new disclosure requirements are effective for annual reporting periods for fiscal years ending after December 15, 2012 for non-public entities. Pursuant to the FASB’s decisions, the new disclosures will include:

  • Legal name, plan number, and employer identification number (EIN)
  • The amount of employer contributions made to the plan
  • An indication of whether the employer’s contributions represent more than 5% of the total contributions to the plan
  • An indication if the plan is subject to a funding improvement plan
  • The expiration dates of collective bargaining agreements and any minimum funding arrangements
  • The most recent certified funded status of the plan, as determined by the plan’s zone status, required by the Pension Protection Act of 2006 (PPA). If the zone status isn’t available, an employer will be required to disclose whether the plan is (a) <65% funded (red zone), (b) 65 to 80% funded (yellow zone) or (c) >80% funded (green zone)
  • A description of the nature and effect of any changes that affect comparability for each period in which an income statement is presented

As of the end of the most recent annual period presented, you’ll also need to disclose:

  • If a funding improvement plan or rehabilitation plan had been implemented or was pending
  • Whether or not a surcharge was paid to the plan
  • A description of any minimum contributions required for future periods by the collective bargaining agreements, statutory obligations, or other contractual obligations, if applicable

The current recognition and measurement guidance for employers that participate in multiemployer plans is unchanged. If you have any questions about these new disclosure requirements, please contact your Gardiner Thomsen Auditor.

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