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.
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.
With Governmental Accounting Standards Board (GASB) Statements 73, 74, and 75, new accounting rules for public postretirement benefit plans in the United States are set to take effect soon. Successful implementation of the new rules will require an understanding of a variety of technical concepts regarding the various newly required calculations. In this PERiScope article, Milliman’s Michael Caparoso discusses the individual entry age actuarial cost method for the valuation of other postemployment benefits (OPEB).
The Governmental Accounting Standards Board (GASB) adopted two statements regarding financial reporting by state and local governments related to other postemployment benefits (OPEB). GASB Statement No. 74, “Financial Reporting for Postemployment Benefits Other Than Pension Plans,” replaces the current GASB 43 and addresses reporting by OPEB plans that administer benefits on behalf of governments.
GASB Statement No. 75, “Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions,” replaces the current GASB 45 and addresses reporting by governments that provide OPEB to their employees and for governments that finance OPEB for employees of other governments. These statements represent a significant change to the methods used to account for postemployment OPEBs.
This PERiScope alert offers more perspective.
The Governmental Accounting Standards Board (GASB) issued two exposure drafts regarding Other Postemployment Benefit (OPEB) financial reporting by state and local governments. These proposed standards will significantly alter the methods used to account for OPEBs, similar to the new GASB 67/68 pension standards.
Like the pension standards, the unfunded liability will become a balance sheet item rather than a note disclosure. These proposed changes in OPEB reporting are sweeping in scope, and they will serve to increase the balance sheet liability and may significantly increase the volatility of annual OPEB expense. This PERiScope alert provides some perspective.