The increased annual disclosure requires companies to provide more details about their plan assets, benefit obligations, cash flows, benefit costs and other relevant information, FASB said in a news release. To accomplish this, FAS 132 will require companies to provide financial statement users with a breakdown of plan assets by category, such as equity, debt and real estate. Additionally, the expected rates of return and target allocation percentages – or target ranges – for these asset categories also are required in financial statements.
Regarding cash flow disclosures, FAS 132 mandates projections of future benefit payments and an estimate of contributions to be made in the next year to fund pension and other postretirement benefit plans.
“The proposed disclosures will provide investors with greater visibility into plan assets and a clearer picture of cash requirements for benefit payments and contributions to fund pension and other postretirement benefit plans,” FASB Project Manager Peter Proestakes said in the news release.
In addition to expanded annual disclosures, the FASB is improving the information available to investors in interim financial statements. Companies are required to report the various elements of pension and other postretirement benefit costs on a quarterly basis.
The guidance is effective for fiscal years ending afterDecember 15, 2003, and for the first fiscal quarter of the year following initial application of the annual disclosure requirements. A copy of FAS 132 is available at www.fasb.org/fas132r.pdf.