FASB Changes Position on Multi-Employer Plan Disclosure

Instead, FASB tentatively decided to require disclosures about multi-employer plans’ zone status and other identifying information.   

According to a Compliance Alert from Segal, FASB may require the following disclosures about participation in multi-employer plans that are material, to give investors or lenders information they could use to find out more about the plans if they believe it would useful: 

• Basic Information about the Plan.  This includes the plan’s legal name and its Employer Identification Number, as well as the expiration date of the collective-bargaining arrangement under which the employer contributes.  
• Information about the Employer’s Contributions.  The employer would have to disclose contributions made to each individually material plan (as well as aggregate contributions to all non-material plans) and whether it paid a surcharge to the plan, if the plan was in critical status (the red zone). The employer would also have to note whether its contributions represent more than 5 percent of total contributions to any plan.  
• Information about Zone Status.  The employer would have to provide the plan’s most recent certified zone status, as required by the Pension Protection Act of 2006, if available, and disclose whether a funding improvement plan or rehabilitation plan had been implemented or was pending. (If the plan’s zone status is not available, an employer would have to disclose the plan’s funded ratio: less than 65%, between 65% and 80%, or greater than 80%.) 

Segal reported FASB is no longer proposing that employers be required to provide the following detailed information about multi-employer plans, which had been proposed in the Exposure Draft along with the withdrawal liability disclosure: 

• The number of multiemployer plans in which the employer participates 
• The total assets and the accumulated benefit obligation of those multiemployer plans
• The employer’s contributions to each material plan as a percentage of total contributions 
• The percentage of the employer’s employees that are covered by multiemployer plans
• Supplemental information about the plans in which the information about the withdrawal liability is not available

FASB may abandon these proposed disclosures based on the more than 320 comments it received on the Exposure Draft.