Objective

The objective of this Standard are as follows:

 

a) To enhance the relevance and representational faithfulness of the employer’s reported results of operations by recognizing net periodic pension cost and net periodic other post-retirement benefit cost as employees render the services necessary to earn their pension and other post-retirement benefits;

 

b) To enhance the relevance and representational faithfulness of the employer’s statement of financial position by including a measure of the obligation to provide pension and other post-retirement benefits based on a mutual understanding between the employer and its employees of the terms of the underlying plan;

 

c) To enhance the ability of users of the employer’s financial statements to understand the extent and effects of the employer’s undertaking to provide pension and other post-retirement benefits to its employees by disclosing relevant information about the obligation and cost of the pension and other post-retirement benefit plans and how those amounts are measured;

 

d) To improve the understandability and comparability of amounts reported by requiring employers with similar plans to use the same method to measure their pension and other post-retirement benefit obligations and the related costs of the postretirement benefits.

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Scope

1. The guidance in the Compensation-Retirement Benefits Topic applies to all employers, including not-for-profit entities (NFPs), that offer pension or other post-retirement benefits to their employees, regardless of whether the benefit obligation is funded. NFPs should refer to ASC 958-715 when applying the provisions of this Standard.

 

2. The guidance in the Compensation-Retirement Benefits Topic applies to the following types of benefit arrangements:

 

a) Any arrangement that is in substance a pension or other post-retirement benefit plan, regardless of its form or the means or timing of its funding;

b) Written plans and unwritten plans whose existence is a discernible either from a practice of paying pension or other post-retirement benefits or from oral representations made to current or former employees;

c) Deferred compensation contracts with individual employees if those contracts, taken together, are equivalent to a plan that provides pension or other post-retirement benefits;

d) Health and other welfare benefits expected to be provided to employees deemed to be on a disability retirement.

 

3. The guidance in this Standard also applies to settlement of all or part of an employer’s pension or other post-retirement benefit obligation or curtailment of a pension or other post-retirement benefit plan. The guidance applies to employers that provide pension or other post-retirement benefits as part of a special termination benefit or special or contractual termination benefits not otherwise addressed in other ASC standards.

 

4. The guidance in this Standard does not apply to the following types of benefit arrangements:

 

a) An employer’s practice of providing pension or other post-retirement benefits to selected employees under individual contracts with specific terms determined on an individual-by-individual basis. Those contracts shall be accounted for individually, following the terms of the contract;

b) Post-retirement benefits paid after employment but before retirement, unless payable from a pension or other post-retirement plan.

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