Dataline: Pension/OPEB accounting -- Understanding changes expected from the IASB (No. 2011-15)

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The IASB is nearing completion of various amendments to its standard on accounting for defined benefit pensions and other postretirement benefits (OPEB). The amendments are not the result of joint deliberations with the FASB. However, the objective of the FASB and IASB is to adopt a converged standard on this topic, and both boards have stated their intent to make further changes to their respective standards to achieve this. Thus, the changes the IASB is expected to adopt shortly will be considered by the FASB for purposes of achieving convergence.

The IASB has concluded that fluctuations in the value of the benefit obligations and plan assets (i.e., gains and losses) should be recognized in the balance sheet in full. This would be accomplished through a charge or credit to other comprehensive income (OCI) in the periods in which the gain or loss occurs. Those amounts would not be subject to subsequent amortization into net income, as currently required under U.S. GAAP. We expect the final amendments to be issued in April 2011, with an effective date no earlier than January 1, 2013.

This Dataline looks at the decisions made by the IASB to date and offers our insight on the upcoming changes in this area of IFRS. Since the FASB and IASB's longer-term objective is to converge U.S. GAAP and IFRS in this area, U.S. employers and other U.S. stakeholders may wish to consider what impact the IASB's planned amendments could have if they are incorporated into U.S. GAAP.