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FASB: New Pension Reporting Rules to Hit by YE 2003
The Financial Accounting Standards Board (FASB), the nation’s accounting rule maker, made the tentative decision at a Wednesday meeting for companies with traditional retirement plans to adopt pending new reporting rules, Dow Jones reported.
Board members decided not to go forward with an earlier plan to ask companies to specify where their pension costs are generated. But they stuck to the rest of their planned initiatives, including one that would require companies to tell what percentage of stocks, bonds, and other asset classes they hold in the pension plan.
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FASB is writing the appropriate rules and says it will publish a draft within weeks for public comment. The group hopes to finalize the rules and adopt them officially soon after that. As a result, companies will have only a brief period to digest the regulations and put them into action.
The group is revamping pension accounting rules because of concerns that the current regulations – dating back to the mid-1980s – don’t produce a true corporate financial picture. The sustained bear market and low interest rates have caused many DB plans to suffer often-sizable funding shortfalls (see America’s Pension Crisis ).
Existing FASB pension reporting rules require companies to provide investors with financial data on pensions only once a year. As part of the new rules, FASB will propose quarterly reporting on some aspects of the plans, including how much a company estimates it will contribute (See FASB Tightens Pension Reporting Noose ).