GASB 68 Pension Accounting Standards
Last week, the Governmental Accounting Standards Board (GASB) voted unanimously to not delay the implementation date for GASB 68, new accounting and financial reporting standards for public pensions. The vote means that the new standards will be effective for fiscal years beginning after June 15, 2014.
In June of 2012, GASB issued new pension accounting standards that will have an impact on the Texas Municipal Retirement System and cities that provide defined benefit plans for their employees. GASB 68, as the standards are called, requires cities to record a net pension liability (NPL) in their financial statements. The new calculation will likely be significantly different (i.e., higher) from the net pension obligation (NPO) that cities currently record.
In a nutshell, cities will begin reporting the net unfunded accrued liability of their pension. Those are the funds that have not yet been added to the pension plan, but are expected to be needed to meet all retirement obligations.
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