The U.S. Financial Accounting Standards Board (FASB) has issued Accounting Standards Update No. 2011-09, Compensation—Retirement Benefits—Multiemployer Plans (Subtopic 715-80): Disclosures about an Employer’s Participation in a Multiemployer Plan. The update is intended to guide employers in providing more information about their financial obligations to multiemployer pension plans (MEPPs).

MEPPs are commonly used by an employer to provide benefits to union employees who may work for many employers during their working life, thereby enabling them to accrue benefits in a single pension plan for their retirement.

The new disclosures include:

  • The amount of employer contributions made to each significant plan and to all plans in the aggregate.
  • An indication of whether the employer’s contributions represent more than 5% of total contributions to the plan.
  • An indication of which plans, if any, are subject to a funding improvement plan.
  • The expiration date(s) of the collective bargaining agreement(s) and any minimum funding arrangements.
  • The most recent certified funded status of the plan, as determined by the plan’s so-called “zone status,” which is required by the Pension Protection Act of 2006. If the “zone status” is not available, an employer will be required to disclose whether the plan is: less than 65% funded, between 65% and 80% funded or at least 80 percent funded.
  • A description of the nature and effect of any changes affecting comparability for each period in which a statement of income is presented.

Prior to this update, employers were required to disclose only their total contributions to all MEPPs in which they participate.

For public entities, the enhanced disclosures will be required for fiscal years ending after Dec. 15, 2011. For non-public entities, the enhanced disclosures will be required for fiscal years ending after Dec. 15, 2012.