GASB Statements No. 74 and 75 have substantially revised the valuation and accounting requirements previously mandated under GASB Statements No. 43 and 45. With implementation required for plan fiscal years beginning after June 15, 2016, for GASB 74 and June 15, 2017, for GASB 75, the time is now for government entities to understand and comply with the new requirements. This article by Milliman’s Joanne Fontana reviews the Alternative Measurement Method, which is used by small government employers in lieu of an actuarial valuation, and discusses the important changes relevant to small government employers as GASB 74/75 takes effect.
New accounting rules in the United States for postemployment benefits other than pension (OPEB), first implemented in 2016, are now in effect. Successful implementation of the new rules will require an understanding of a variety of technical concepts regarding the newly required calculations.
This article by Milliman actuary Rebecca Ross explores OPEB expenses and balance sheet items. Rebecca discusses the new requirements for disclosing OPEB expense and the effect these changes will have on plan and employer financial statements.
This article is part of the Governmental Accounting Standards Board Statement 74 and 75 miniseries.
In 2016, new Governmental Accounting Standards Board (GASB) rules were implemented for postemployment benefits other than pensions (OPEB). Other rules are scheduled to go into effect this year.
Successful implementation of the new rules requires an understanding of various technical concepts related to newly required calculations. In this PERiScope article, Milliman’s Tim Herman discusses the allocation of financial reporting liabilities and expenses for cost-sharing multiple-employer OPEB plans under GASB 75.
This article is part of Milliman’s Governmental Accounting Standards Board (GASB) 73/74/75 series.
More retirement-related regulatory news for plan sponsors, including links to detailed information.
BLS article explores defined contribution retirement plans
A new article from the Bureau of Labor Statistics (BLS) takes a look at five types of employer-sponsored defined contribution retirement plans in private industry. The Beyond the Numbers article shows the overall employee participation rates, employee participation rates by type of plan, and overall employer costs and worker participation costs for all types of plans. All defined contribution plans described in this article have some form of employer cost. Plans are categorized by type on the basis of Internal Revenue Code requirements and variations in contribution methods. The data are from the BLS National Compensation Survey (NCS) and are presented by selected worker and establishment characteristics and geographic areas.
To read the entire article, click here.
CBO releases options for reducing the deficit, 2017 to 2026
The Congressional Budget Office (CBO) released “Options for reducing the deficit: 2017 to 2026,” presenting 115 options that would decrease federal spending or increase federal revenues over the next decade. The options included in this volume come from various sources. Some are based on proposed legislation or on the budget proposals of various administrations; others come from Congressional offices or from entities in the federal government or in the private sector. The options cover many areas—ranging from defense to energy, Social Security, and provisions of the tax code.
To download the report, click here.
GASB issues guidance on certain asset retirement obligations
The Governmental Accounting Standards Board (GASB) issued guidance for state and local governments addressing liabilities known as “asset retirement obligations.” An asset retirement obligation (ARO) is a legally enforceable liability associated with the retirement of a tangible capital asset. GASB Statement No. 83, Certain Asset Retirement Obligations, establishes guidance for determining the timing and pattern of recognition for liabilities and corresponding deferred outflows of resources related to AROs.
Existing laws and regulations require state and local governments to take specific actions to retire certain capital assets, such as the decommissioning of nuclear reactors and the dismantling and removal of sewage treatment plants. Other obligations to retire certain capital assets may arise from contracts or court judgments.
To read the entire GASB statement, click here.
GASB Statement 73 is for accounting and financial reporting for pensions not within the scope of GASB Statement 68, and applies for employer fiscal years beginning after June 15, 2016. GASB 73 applies to retirement plans (both defined benefit and defined contribution) that either do not have any dedicated assets associated with them or have assets that are not in a trust meeting certain requirements. With no assets in an irrevocable trust, the entire total pension liability is shown on the employer’s balance sheet under GASB 73.
Implementation of GASB 73 will result in required enhancements to financial statement disclosures by establishing a single framework for the presentation of information about pensions, which will enhance the comparability of pension-related information reported by employer and non-employer contributing entities. Milliman’s Jack Chmielewski provides perspective in this PERiScope article.
Governmental Accounting Standards Board (GASB) Statements 74 and 75 mandate changes to the way liabilities are reported on financial statements for state and local governments with other postemployment benefits (OPEB) obligations. These changes are designed to standardize the way OPEB expense is calculated and displayed in order to enhance disclosure and facilitate decision-making. There are several important dates to consider when calculating and reporting OPEB liability: the reporting date, actuarial valuation rate, and measurement date. Milliman’s Rebecca Ross provides perspective in this PERiScope article.