The Financial Accounting Standards Board has finalized its work on a new accounting standard that will require companies to disclose more in their financial statements about their obligations to fund pension benefits through multiemployer pension plans, such as union plans.

FASB expects to issue the final standard in September so that it can become effective for fiscal years ending after Dec. 15, 2011. That means calendar-year companies will generally adopt the new requirements in their 2011 financial statements.

The new disclosures will require companies to disclose the amount they are contributing to each significant multi-employer plan that they support and the amount contributed to all plans combined. It also will require companies to indicate when their contributions represent more than 5 percent of the total contributions to the plan and whether the plan is under any kind of funding improvement plan. Finally, companies will be required to provide some information on the most recent certified funded status of each plan and to describe the nature and effect of any changes that might affect comparability.

FASB decided against its controversial proposal to require companies to calculate and disclose their withdrawal liability, which would represent an amount the company would have to pay if it were to exit the plan. It also decided against requiring a “point-in-time” estimate of obligations related to the underfunded status of individual plans.  

Historically, companies have been required to disclose only their total contributions to all plans in which they participate, leaving investors with lots of unanswered questions about the true measure of any given company's obligation to fund a plan, especially underfunded plans that require catch-up contributions. FASB Chairman Leslie Seidman said in a statement the new disclosures will provide more information about companies' pension commitments and the financial health of the plans.