Close Close
ThinkAdvisor

Retirement Planning > Retirement Investing

GASB Issues Guidance For Public Plans

By Staff Writer

X
Your article was successfully shared with the contacts you provided.

The Governmental Accounting Standards Board has drafted advice that could affect how states, cities and other public employers calculate health and pension retirement benefits contributions.

GASB, Norwalk, Conn., says the proposed Technical Bulletin, Determining the Annual Required Contribution for Postemployment Benefits, makes it clear that public employers can use actual known amounts, not just estimates, when calculating retirement benefits contribution adjustments.

Earlier GASB instructions, given in GASB Statement Number 27, Accounting for Pensions by State and Local Governmental Employers, and GASB Statement Number 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, explained the rules for estimating the amounts.

The proposed technical bulletin deals with the portion of the annual contribution calculation related to past overpayments and underpayments.

When those amounts have been recognized in the financial statements, public employers need to make adjustments in future annual retirement benefits contributions to avoid counting the same amount twice, GASB officials write.

The drafters of statements 27 and 45 assumed that the public employers would not know the actual amounts involved in the adjustments, GASB officials write.

Since those statements were drafted, GASB has learned that some actuaries do track contribution underpayment and overpayment adjustments separately, GASB officials write.

“This proposed technical bulletin will clarify that governments may base the [annual required contribution] adjustment on the actual amount when it is known,” officials write.

Comments on the draft are due Sept. 30.

NOT FOR REPRINT

© 2023 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.