On Monday, September 27, 2010, Cary Franklin spoke at the annual conference of the National Coordinating Committee for Multiemployer Plans (NCCMP) in Hollwood, Florida.  Cary, an actuary and managing consultant in Horizon’s Los Angeles office, delivered a presentation on the Pension Relief Act of 2010 and its effect on multiemployer pension plans.

Charlie Storke, an attorney from Trucker Huss, and Josh Shapiro, an actuary from the NCCMP, joined Cary in delivering the presentation.
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The presentation discussed the evolution of the funding relief provisions over the past several months before eventually being signed into law on June 25, 2010.  It also discussed certain areas where the law is ambiguous and where guidance from the IRS may be needed in order to apply the special funding relief rules.











Cary Franklin (center) discusses the Pension Relief Act of 2010 at the 2010 NCCMP annual conference with Charlie Storke (left) and Josh Shapiro (right).

On July 9, 2010, The Washington Examiner published an editorial by Mark Tapscott titled “Are you depending on one of these 108 worst-funded union pension plans?” Over the past several weeks, this editorial has gained some attention, and some parties have even distributed it to people covered under these pension plans.

It is true that many pension plans – both union and non-union – are facing challenges in the wake of the financial market collapse of 2008 and continuing poor economic conditions. However, The Examiner editorial uses misleading information to portray union pension plans as being worse funded than they actually are.
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This Horizon bulletin outlines the ways in which the information in The Examiner editorial (taken from a Moody’s report from September, 2009) is misleading.  A participant in a multiemployer pension plan who has questions regarding its funded status should contact the plan itself to receive better information.

Kevin Culp, a consulting actuary in Horizon’s Washington, DC office, recently completed the educational requirements necessary to earn the designation of Fellow of the Society of Actuaries.

​Congratulations to Kevin on this great accomplishment!

On September 1, 2010, the Financial Accounting Standards Board (FASB) issued an Exposure Draft on increased disclosure requirements for employers participating in multiemployer plans.  The news release from FASB is posted below.  Note that comments on this Exposure Draft are due by November 1, 2010.

A copy of the Exposure Draft can be found either at www.fasb.org or here.

NEWS RELEASE 09/01/10

FASB Issues Proposed Accounting Standards Update to Improve Disclosure about Entities Participating in Multiemployer Plans

Norwalk, CT, September 1, 2010—The Financial Accounting Standards Board (FASB) has issued an Exposure Draft of a proposed Accounting Standards Update (Update) intended to increase transparency in financial reporting about entities that participate in multiemployer pension and other postretirement benefit plans.

The proposed Update sets forth proposed disclosures that the Board believes would help users of financial statements better assess the potential risks faced by employers participating in multiemployer plans. A recent study of over 100 multiemployer plans, including the largest plans in the country (as measured by assets), indicated that in 2008 those plans were collectively underfunded by over $160 billion (approximately 44% of their collective plan liabilities). Current U.S. GAAP requires employers to disclose their total contribution to multiemployer plans, but there is no requirement to describe the funding status of these plans. Under the proposed guidance, employers would have to provide more information, including a description of the plans in which the employer is involved, the employer’s contractual commitments to the plans, and the expected impact of participating in the plans on the employer’s future cash flows (including the potential impact of plan withdrawal obligations).

“Investors and other financial statement users have expressed concern that current financial statements do not provide enough information about the commitments and potential risk related to multiemployer pension arrangements,” states FASB member Leslie Seidman. “We encourage our constituents to review and provide comment on the Board’s suggestions for expanding disclosure in this area, one that has gained greater urgency as a result of the recent financial crisis and underfunding of many such plans.”

If approved, the proposed Update would require a public company to provide the enhanced disclosures for fiscal years ending after December 15, 2010, and in subsequent fiscal years.

A nonpublic company would be required to provide the enhanced disclosures for fiscal years beginning on or after December 15, 2010, and in subsequent fiscal years (one year later than a public company).
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The comment period for the proposed Update extends through November 1, 2010. The Exposure Draft is available at www.fasb.org.