The New Pension Reporting Standard

In June 2012, the Governmental Accounting Standards Board (GASB) approved Statement 68, Accounting and Financial Reporting for Pensions, which changes how US state and local governments calculate and report the costs and liabilities related to defined benefit pension plans provided to employees. Most governments will have to report a net pension liability on their financial statements for the first time; for many governments, the size of the liability will be significant. Before considering the specific requirements of GASB Statement 68, it is important to note that the standard does not change the finding requirements for governments. The amount contributed to the pension plan may be a policy decision or may be dictated by state or local laws or collective bargaining agreements. In addition, the standard does not change how pension expenditures are reported in a governmental fund. GASB Statement 68 will expand both the note disclosure and required supplementary information related to defined benefit plans.