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FASB Proposes Changes to Disclosure, Presentation of Post-retirement Benefits

By:
Chris Gaetano
Published Date:
Jan 27, 2016
Change Ahead SignThe Financial Accounting Standards Board (FASB) has released a pair of proposals that are intended to improve the disclosure and presentation of pensions and other post-retirement benefits in a way that is, in the case of disclosures, more streamlined and, in the case of presentation, more set apart. 
 
The first proposed change, Changes to the Disclosure Requirements for Defined Benefit Plans, is intended to remove standards the FASB felt weren't really that relevant, and replace them with five more that it felt added "other pertinent information." This means that, under the new standards, entities would no longer have to disclose things such as things relating to the 2001 amendments to the Japanese Welfare Pension Insurance Law, or the aggregation of the pension accumulated benefit obligation and aggregate fair value plan assets. The seven items would be replaced with five disclosures more holistic in nature. . 
 
While the FASB, in the exposure draft, said financial statement users do not believe there is anything in the current standards that need substantial revision, "the Board believes that incremental improvements could be achieved by eliminating unimportant information and adding other pertinent information." 
 
The other proposal, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, takes a slightly different tack. While the previous one concerned removing irrelevant disclosures and replacing them with ones more germane to pension obligations, this one is aimed at disaggregating items. Under current GAAP, net benefit costs comprise several components reflecting different parts of an entity's financial obligations and arrangements, but are reported in aggregate. This includes things such as service costs, interest costs, amorization, and gains or losses.