New pension accounting and reporting standards on the horizon
In June 2012, the Governmental Accounting Standards Board (GASB) issued new standards for pension accounting and reporting — standards that will significantly change the way state and local governments calculate and report the costs and obligations associated with providing pension benefits for their employees.
Implementation of the revised standards will take place in two phases. GASB Statement No. 67, Financial Reporting for Pension Plans, is effective for reporting on fiscal year 2014. Statement No. 68, Accounting and Financial Reporting for Pensions, is effective for reporting on fiscal year 2015.
Statement No. 67 addresses financial reporting for state and local government pension plans. Statement No. 68 establishes new accounting and financial reporting requirements for governments that provide their employees with pensions. Employers are encouraged to visit both www.gasb.org and www.gfoa.org to learn more about the new standards.
Included in Statement No. 68 are requirements for state and local government employers to recognize their proportionate share of an unfunded pension obligation (also called the “net pension liability”) as a balance sheet liability in their government-wide basic financial statements. In addition, employers will be required to recognize certain pension expenses immediately rather than extending them over a period of time.
For Washington, implementation of the new standards will be challenging because of the number of pension plans administered by the state and the high number of employers participating in each plan. For employers, the standards will bring major changes to their governmental financial statements.
The Department of Retirement Systems, the Office of the State Actuary, the State Treasurer’s Office, the State Auditor’s Office, the Office of Financial Management and the Department of Enterprise Services have formed a workgroup to collaborate in implementing the new standards. Stay tuned for more information in the months ahead.
Should you have any questions regarding this notice please reply to this email or contact Employer Support Services at 360-664-7200, option 2, or 800-547-6657, option 6, option 2.