GASB Statement No. 78 provides guidance for certain multiple-employer defined benefit pension plans

TO FURTHER ENABLE STATE AND LOCAL GOVERNMENTAL EMPLOYERS to obtain necessary measurements and information for some multiple-employer defined benefit plans, the Governmental Accounting Standards Board (GASB) issued Statement No. 78 – Pensions Provided through Certain Multiple-Employer Defined Benefit Pension Plans – in December 2015.

Statement No. 78 amends the scope and applicability of Statement No. 68 – Accounting and Financial Reporting for Pensions – and applies to cost-sharing multiple-employer defined benefit pension plans that:

• Are not a state or local governmental pension plan,• Provide defined benefit pensions to both employees of state or local

governmental employers and to employees of employers that are not state or local governmental employers, or

• Do not have a predominant state or local governmental employer – either individually or collectively – that provides pensions through the plan.

Statement No. 78 includes requirements for recognizing and measuring pension expense, expenditures and liabilities, as well as note disclosures and required supplementary information.

Effective Date

STATEMENT NO. 78 takes effect for reporting periods beginning after December 15, 2015. The GASB encourages earlier application.

Anticipated Improvements

PRIOR TO ISSUANCE OF STATEMENT NO. 78, multiple-employer defined benefit plans needed to conform to requirements contained in Statement No. 68, which took effect for fiscal years beginning after June 15, 2014. Stakeholders raised concern about the difficulty employers for certain multiple-employer defined benefit plans faced in compiling measurements and other information due to a governmental employer’s relationship with such pension plans.

In response, the GASB placed development of Statement No. 78 on an accelerated timetable to provide greater clarity, consistency and direction for governments that must report on such plans.

GovernmentInsightsGASB Statement

No. 78

Measurements Needed for Financial Statements

DISCLOSURE NOTES for cost-sharing pension plans must include:

• Pension plan name, identification of administering entity, and identification of plan as a cost-sharing pension plan

• Whether the plan issues a publicly-available financial report• A brief description of benefit terms• A brief description of contribution requirements that includes:

• The basis for determining employer’s contributions• The identified authority for establishing or amending contribution

requirements• Required reporting period contribution rates for employers and employees• Required reporting period employer contributions - in dollar amounts• Expiration dates for any related collective bargaining agreements

Required Supplementary Information

FINANCIAL REPORTS require a schedule of the employer’s contributions for the 10 most recent fiscal years. Amounts associated with each pension plan should be identified. Factors that significantly affect trends in the amounts reported, such as changes in population size or contribution rate requirements, should also be presented.

Summary

STATEMENT NO. 78 was developed for certain multiple-employer defined benefit pension plans. The statement addresses concerns raised regarding the ability of governments to obtain necessary measurements and other information. Financial reports for affected plans must comply with Statement No. 78 for reporting periods beginning after December 15, 2015.

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CONTACT USSara Dempsey, Partner Assurance Services sara.dempsey@weaver.com

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Government Insights: GASB Statement No. 78

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