United States

Changes to disclosures for sponsors of defined benefit plans


As part of its disclosure framework project, the Financial Accounting Standards Board (FASB) recently issued Accounting Standards Update (ASU) 2018-14, Compensation – Retirement Benefits – Defined Benefit Plans – General (Subtopic 715-20): Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans. The ASU applies the provisions of recently released Chapter 8, “Notes to Financial Statements,” of the FASB’s Conceptual Framework for Financial Reporting, resulting in the removal, addition and clarification of certain disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans.

ASU 2018-14 removes the following disclosure requirements from Subtopic 715-20:

  • The amounts in accumulated other comprehensive income expected to be recognized as components of net periodic benefit cost over the next fiscal year.
  • The amount and timing of plan assets expected to be returned to the employer.
  • The disclosures related to the June 2001 amendments to the Japanese Welfare Pension Insurance Law.
  • Related party disclosures about the amount of future annual benefits covered by insurance and annuity contracts and significant transactions between the employer or related parties and the plan.
  • For nonpublic entities, the reconciliation of the opening balances to the closing balances of plan assets measured on a recurring basis in Level 3 of the fair value hierarchy. However, nonpublic entities are required to disclose separately the amounts of transfers into and out of Level 3 of the fair value hierarchy and purchases of Level 3 plan assets.
  • For public entities, the effects of a one-percentage-point change in assumed health care cost trend rates on (a) the aggregate of the service and interest cost components of net periodic benefit costs and (b) the benefit obligation for postretirement health care benefits.

The following disclosure requirements are added to Subtopic 715-20:

  • The weighted-average interest crediting rates for cash balance plans and other plans with promised interest crediting rates.
  • An explanation of the reasons for significant gains and losses related to changes in the benefit obligation for the period.

The ASU also clarifies the disclosure requirements in paragraph 715-20-50-3.

The ASU is effective for fiscal years ending after December 15, 2020 for public business entities, and for fiscal years ending after December 15, 2021 for all other organizations. Early adoption is permitted.