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October 13, 2011

Important Changes Ahead for Employers with Multi-employer Pension Plans

Multi-employer pension plans are often utilized by employers to provide benefits to union employees who may work for multiple employers during their working lives and, thereby, accrue benefits in one plan for their retirement. Late last month, the Financial Accounting Standards Board ("FASB") issued an accounting standards update on employer disclosures related to these plans (ASU 2011-09: Disclosures about an Employer's Participation in a Multi-employer Plan) that revises prior guidelines and enhances disclosures employers include in their financial statements when they are participating in multi-employer plans.

The revised disclosures will provide financial statement users with additional information about plans where employers participate, the level of employer participation in the plans, and the financial health of significant plans. Additionally, the disclosures should enable users of financial information to obtain additional information outside the financial statements themselves, including the funded status of the plans. However, the update does NOT require disclosure of employer withdrawal liabilities.

The essential elements of the new disclosures for individually significant plans are as follows:

  • Plan legal name, plan Employer Identification Number, and, if available, the plan number.
  • Most recent certified funded status, expressed as a "zone status," as required by the Pension Protection Act of 2006. If the zone status information is not available, employers are required to disclose whether the plan was:
    • Less than 65% funded
    • Between 65% and 80% funded
    • At least 80% funded.
  • Expiration date of collective bargaining agreements and any minimum funding arrangements.
  • Indication of whether employer contributions represent more than 5% of total contributions to the plans.
  • Indication of what plans, if any, are subject to funding improvement plans.
  • A description of the nature and effect of any changes affecting comparability for periods presented in the financial statements.

The revised disclosures are effective for public entities in financial statements for annual periods for fiscal years ending after December 15, 2011, and are applicable to all other entities in annual periods for fiscal years ending after December 15, 2012. Early implementation is permitted.

Please contact your Marcum professional for any additional information or assistance.

A special thanks to article contributors Joseph DeSimone, CPA, CVA and Julie Meyer, Marketing Manager.

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