29
MAR
2014

GASB 67 – Disclosure Changes for Single Employer Plans

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Here are a few new disclosures required under GASB 67…

Regarding investment policies:
1) Procedures and authority for establishing and amending investment policy decisions.

2) Policies pertaining to asset allocation.
3) Description of significant investment policy changes during the reporting period.
4) The annual money-weighted rate of return on pension plan investments calculated as the internal rate of return on pension plan investments, net of pension plan investment expense, and an explanation that a money-weighted rate of return expresses investment performance, net of pension plan investment expense, adjusted for the changing amounts actually invested. Pension plan investment expense should be measured on the accrual basis of accounting. Inputs to the internal rate of return calculation should be determined at least monthly. The use of more frequently determined inputs is encouraged.

New DROP disclosures: Deferred retirement option program (DROP) balances—If a pension plan includes terms that permit a plan member to be credited for benefit payments into an individual member account within the pension plan while continuing to provide services to the employer and to be paid a salary:
(1) A description of the DROP terms
(2) The balance of the amounts held by the pension plan pursuant to the DROP.

Regarding components of the net pension liability:

(1) The total pension liability

(2) The pension plan’s fiduciary net position

(3) The net pension liability

(4) The pension plan’s fiduciary net position as a percentage of the total pension liability.

Regarding the discount rate:
1) The discount rate applied in the measurement of the total pension liability and the change in the discount rate since the pension plan’s prior fiscal year-end, if any

2) Assumptions made about projected cash flows into and out of the pension plan, such as contributions from employers, nonemployer contributing entities, and plan members.

3) The long-term expected rate of return on pension plan investments and a description of how it was determined, including significant methods and assumptions used for that purpose.

4) If the discount rate incorporates a municipal bond rate, the municipal bond rate used and the source of that rate.

5) The periods of projected benefit payments to which the long-term expected rate of return and, if used, the municipal bond rate applied to determine the discount rate.

6) The assumed asset allocation of the pension plan’s portfolio, the long-term expected real rate of return for each major asset class, and whether the expected rates of return are presented as arithmetic or geometric means, if not otherwise disclosed.

7) Measures of the net pension liability calculated using (i) a discount rate that is 1-percentage-point higher than that required by paragraph 40 and (ii) a discount rate that is 1-percentage-point lower than that required by paragraph 40 of GASB 67.

Required Supplementary Information:
1) A 10-year schedule of changes in the net pension liability, presenting for each year (1) the beginning and ending balances of the total pension liability, the pension plan’s fiduciary net position, and the net pension liability, and (2) the effects on those items during the year of the following, as applicable:
(1) Service cost
(2) Interest on the total pension liability
(3) Changes of benefit terms
(4) Differences between expected and actual experience with regard to economic or demographic factors in the measurement of the total pension liability
(5) Changes of assumptions about future economic or demographic factors or of other inputs
(6) Contributions from employers
(7) Contributions from nonemployer contributing entities
(8) Contributions from plan members
(9) Pension plan net investment income
(10) Benefit payments, including refunds of plan member contributions
(11) Pension plan administrative expense
(12) Other changes, separately identified if individually significant.

2) A 10-year schedule presenting the following for each year:
(1) The total pension liability
(2) The pension plan’s fiduciary net position
(3) The net pension liability
(4) The pension plan’s fiduciary net position as a percentage of the total pension liability
(5) The covered-employee payroll
(6) The net pension liability as a percentage of covered-employee payroll.

3) A 10-year schedule presenting for each year the information indicated below if an actuarially determined contribution is calculated for employers or nonemployer contributing entities. The schedule should identify whether the information relates to the employers, nonemployer contributing entities, or both.

(1) The actuarially determined contributions of employers or nonemployer contributing entities.

(2) For cost-sharing pension plans, the contractually required contribution of employers or nonemployer contributing entities, if different from (1). For purposes of this schedule, contractually required contributions should exclude amounts, if any, to separately finance specific liabilities of an individual employer or nonemployer contributing entity to the pension plan.

(3) The amount of contributions recognized during the fiscal year by the pension plan in relation to the actuarially determined contribution in (1). For purposes of this schedule, contributions should include only amounts recognized as additions to the pension plan’s fiduciary net position resulting from cash contributions and from contributions recognized by the pension plan as current receivables.

(4) The difference between the actuarially determined contribution in (1) and the amount of contributions recognized by the pension plan in relation to the actuarially determined contribution in (3).

(5) The covered-employee payroll.

(6) The amounts of contributions recognized by the pension plan in relation to the actuarially determined contribution in (3) as a percentage of covered-employee payroll in (5).

4) A 10-year schedule presenting for each fiscal year the annual money-weighted rate of return on pension plan investments.

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