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A Look at GASB’s Post-Implementation Review of Pension Standards
NCPERS spoke with the Governmental Accounting Standards Board team about the recently completed post-implementation review of the pension standards issued in 2012.
By: Lizzy Lees, Director of Communications, NCPERSEarlier this year, the Governmental Accounting Standards Board (GASB) completed an extensive post-implementation review (PIR) of the pension standards issued in 2012, Statement No. 67, Financial Reporting for Pension Plans, and Statement No. 68, Accounting and Financial Reporting for Pensions. NCPERS spoke with the GASB team about the review and the report issued at its conclusion earlier this year.
Q: The GASB's 2012 pension standards established new accounting and financial reporting requirements for pensions. What led up to the release of these standards?
A: The GASB's existing pension standards at that time had been in place for more than ten years and staff research indicated that there were significant opportunities for improving them in terms of their effectiveness in supporting accountability and providing information that could be helpful to financial statement users in making decisions. The 2012 pension standards brought about substantial improvements in the transparency, consistency, and comparability of the pension information reported by state and local government and pension plans. The standards spanned every aspect of financial reporting – recognition, measurement, disclosure, and presentation.
Q: What does the GASB's post-implementation review process look like?
A: This review begins once a major standard has been issued and doesn't conclude until at least the standard has fully implemented for at least five years. So rather than marking the end of the journey, the issuance of a final GASB standard actually launches a new project phase. For all of our standards, the GASB continues to provide education, respond to technical inquiries, and potentially issue questions and answers via implementation guidance. More complex projects like pensions enter a more formal post-implementation review (PIR) phase, which evaluates whether standards are achieving their objectives, including whether they provide financial statement users with relevant information in ways that justify the cost of providing it.
Following the effective date of the standard, staff uses a range of outreach methods to evaluate whether:
- Standards are accomplishing their intended purpose,
- The information's benefits to financial statement users justify the costs to governments in providing it, and
- There are any potential areas of improvement for the standard-setting process.
Q: What are the key takeaways from the PIR Report on the pension standards that government pension plans should be aware of?
A: The pension PIR team's primary conclusion was that, overall, the statements are accomplishing their stated purposes, that the costs and benefits are in line with what the Board contemplated and stakeholders expected at the time of the issuance of the standards. This conclusion was reached following extensive research and outreach activities following the effective date of the standards including roundtables with five stakeholder groups (government preparers, auditors, pension plans, actuaries/benefits consultants, and users of financial statements), surveys of all five stakeholder groups, an analysis of archival data, and a synthesis of the relevant academic literature. In addition, the pension PIR team did not make any recommendations for changes to the standard-setting process.
Q: What were the findings related to staff hours and costs incurred by the governmental plans as part of the implementation process?
A: Some governments and pension plans volunteered to provide us with cost data, including hours and dollars required to implement the standard in the year prior to implementation, the year of implementation, and the year following implementation. In this sample of plans, we observed the expected trend – that costs peaked in the year of implementation and declined in the subsequent year.
Q: Does the GASB have any planned next steps in this process related to pensions?
A: The way our process works is that any changes to the pension standards would start with the Board deciding to add a standard-setting project to the agenda to evaluate pensions and go through our established due process and the Board has not made such a decision at this time. It is important to note that we also have an ongoing PIR on other postemployment benefits (OPEB), which are closely related to the pension standards. That review will offer opportunities in the near future for NCPERS members to share their views with us about how those standards are working.
Q: Are there any additional resources available for plans interested in learning more?
A: You can learn more about additional GASB PIR projects by visiting the PIR web portal. The full PIR report on pension is available here.
In August 2024, the GASB released a pair of podcasts on the PIR process and the PIR report on the pension standards, which are available here.
The GASB would like to thank all the NCPERS members who participated in the Pension PIR process. We appreciate your perspective, time, and engagement.
If you have any questions about this Q&A or any other governmental accounting related topic, please reach out to us. We always look forward to hearing from you.
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