Companies have some new reporting obligations to meet for the 2011 calendar year now that the Financial Accounting Standards Board has finalized its guidance on multiemployer pension plans.

FASB published Accounting Standards Update No. 2011-09, Compensation - Retirement Benefits - Multiemployer Plans to require companies to provide more information about their obligations to contribute to multiemployer plans, such as union pension plans, and to give users of financial statements a better sense of how those funds are performing. Users of financial statements told FASB that prior rules provided little visibility into the magnitude of a company's obligation to contribute to multiemployer plans, especially underfunded plans where employers might face mounting future obligations.

In its final standard, FASB stopped short of its original idea to require companies to provide the worst-case-scenario obligation. That would be the “withdrawal liability,” or the amount a company would have to contribute to meet its existing contractual obligation if it were to withdraw from a plan entirely. Companies argued the number would be hard to calculate because it would require data from plan administrators, and it wouldn't necessarily reflect an actual obligation. FASB also dropped its original idea to require companies to provide the total assets and accumulated benefit obligations of plans and the employer's contribution to a plan as a percentage of total contributions.

Instead, FASB's final standard requires companies to provide a variety of information meant to point users of financial statements in the direction they need to go if they'd like to learn more about the financial health of a given plan. With their own research and conjecture, they can arrive at conclusions of their own about any possibility that the company might eventually face a mounting contribution obligation.

For example, the final standard requires companies to provide the legal name of any multiemployer plan to which they have contractual obligations, the employer identification number for those plans, the amount of contributions to each plan individually and all plans in the aggregate, and a variety of data regarding contributions and funded status of plans that would give financial statement readers signals about the potential for contribution requirements to grow.

Public companies are required to implement the new standard for annual periods ending after Dec. 15, 2011, so it is effective for calendar-year companies with their 2011 financial statements. Private and not-for-profit companies have an extra year to adopt it.