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Transcript of PWC fas 132
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8/3/2019 PWC fas 132
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___________________________________________________________________--
human resource servicesCreating Value for your Business through People
Understanding the FASBs New Pension/OPEB Disclosure Rules
OVERVIEW
On December 23, 2003, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 132 (revised 2003), Employers Disclosures about Pensions
and Other Postretirement Benefits, an amendment of FASB Statements No. 87, 88, and 106, and a
revision of FASB Statement No. 132 (FAS 132 (revised 2003)). This Statement revises employers
disclosures about pension plans and other postretirement benefit plans. It does not change the
measurement or recognition of those plans required by FASB Statements No. 87, Employers
Accounting for Pensions, No. 88, Employers Accounting for Settlements and Curtailments of Defined
Benefit Pension Plans and for Termination Benefits, and No. 106, Employers Accounting forPostretirement Benefits Other Than Pensions . The new rules require additional disclosures about the
assets, obligations, cash flows, and net periodic benefit cost of defined benefit pension plans and
other postretirement benefit plans. The required information should be provided separately for
pension plans and for other postretirement benefit plans. The new disclosures are generally effective
for 2003 calendar year-end financial statements of public companies, with a delayed effective date for
certain disclosures, for foreign plans, and for non-public entities.
Observation: FAS 132 (revised 2003) does not eliminate any of the disclosures currently required
by FAS 132. Until FAS 132 (revised 2003) is fully adopted, companies are required to provide all of
the current FAS 132 disclosures for all plans, foreign and domestic.
This HRS Insight summarizes the new disclosures required by FAS 132 (revised 2003) and
provides a comparison to previous authoritative guidance in Exhibit A. Note that amounts relatedto the employers statement of financial position, unless otherwise stated, shall be disclosed as of
the measurement date for each statement of financial position presented with the exception of
estimated future benefit payments and contributions to fund the plans, which should coincide with
the date of the plan sponsors latest statement of financial position.
Observation: For public companies, the majority of the new disclosures contained in FAS 132
(revised 2003) are required for fiscal years ending after December 15, 2003; therefore calendar
year-end public company employers will need to present the new disclosure information in 2003
year-end financial statements. Accordingly, public clients should become familiar with the new
standard immediately and coordinate implementation with their actuaries.
NEW DISCLOSURE REQUIREMENTS
Plan Assets
Disclose the following information about
plan assets:
a. For each major category of plan assets,
which shall include at a minimum, equity
securities, debt securities, real estate, and
all other assets, the percentage of the fair
value of total plan assets held as of themeasurement date used for each
statement of financial position presented.
Disclosure of additional asset categories
and additional information about specific
assets within a category is encouraged if
that information is expected to be useful in
understanding the risks associated with
each asset category and the overall
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expected long-term rate of return on
assets.
Observation: Companies are not required
to present information about maturities of
their debt securities. The Board believed
that information would help users to assessthe degree to which investment cash flows
are aligned with benefit payments and
proposed such a disclosure in the exposure
draft of FAS 132 (revised 2003). The Board
subsequently decided that the disclosure did
not pass a cost/benefit test, given that debt
securities typically comprise a small portion
of the plan assets of most companies.
Accordingly, companies are not required to
provide information about the maturities of
their debt securities.
b. A narrative description of investmentpolicies and strategies, including target
allocation percentages or range of
percentages for each major category of
plan assets presented on a weighted
average basis as of the measurement
date of the latest statement of financial
position presented (if used), and other
pertinent factors such as investment
goals, risk management practices,
allowable and prohibited investment types
including the use of derivatives,
diversification, and the relationship
between plan assets and benefit
obligations.
Observation: The last example above of a
pertinent factor, the relationship between plan
assets and benefit obligations, is intended to
convey how assets mature or are scheduled to
turn over according to the investment policy in
order to meet maturing obligations under the
plan. If a company has different investment
strategies for different pension or post-
retirement benefit plans, it may need to
include more than one narrative descriptiondepending on how significant the differences
are. If a company does not use a target
allocation as part of its investment strategy, it
is not required to create one in order to meet
this disclosure requirement.
c. A narrative description of the basis used to
determine the overall expected long-term
rate of return on assets assumption, such
as the general approach used, the extent
to which the overall rate of return
assumption was based on historical
returns and the extent to which
adjustments were made to those historical
returns and how those adjustments were
determined.
Accumulated Benefit Obligation
For defined benefit pension plans, disclose
the accumulated benefit obligation (ABO).
Observation: Under FAS 87, the ABO is
used to determine whether an additional
minimum liability should be recorded at the
measurement date. That determination is
made on a plan-by-plan basis. However,
the ABO to be disclosed under FAS 132
(revised 2003) represents a combined ABOamount for all of the employers plans.
Therefore, for employers with more than one
plan, the disclosed ABO compared to the
disclosed total fair value of all plan assets
will not be indicative of the need to record an
additional minimum liability.
Estimated Future Benefit Payments
Disclose the benefits (as of the date of the
latest statement of financial position
presented) expected to be paid in each of
the next five fiscal years, and in the
aggregate for the succeeding five fiscal
years. The expected benefits should be
estimated based on the same assumptions
used to measure the companys benefit
obligation at the end of the year and should
include estimated future employee service.
Observation: Because this estimate should
include benefits attributable to both past
service and estimated future service of
current employees, it will go beyond the
projected benefit obligation that companiescalculate today under FAS 87. As noted
below, this disclosure is first effective for
fiscal years ending after June 15, 2004.
Accordingly, companies are not required to
provide this disclosure in their 2003 year-
end financial statements and have additional
time in which to gather the information
needed to make the disclosure. Because
actuarial valuation systems will likely capture
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expected benefit payments on a
measurement date to measurement date
year, estimates of benefit payments on a
fiscal-year basis will be required. In some
cases, however, we expect that benefits
based on a measurement date year will not
be materially different from a fiscal yearbasis; so separate fiscal year estimates may
not be needed.
Employers Contributions Expected To
Be Paid During the Next Fiscal Year
Disclose the employers best estimate, as
soon as it is reasonably determinable, of
contributions expected to be paid to the plan
during the next fiscal year beginning after
the date of the latest statement of financial
position. Estimated contributions may be
presented in the aggregate combining (1)contributions required by funding regulations
or laws, (2) discretionary contributions, and
(3) noncash contributions.
Observation: For funded plans, companies
will need to request their actuaries to estimate
the minimum funding requirements for the next
fiscal year. Those estimates may differ from
the actuarial valuations developed for funding
purposes, which relate to the plan year and
may be performed subsequent to the time
when year-end disclosures are prepared. In
addition, this information should be reviewed
quarterly and management should assess any
planned contributions on an annual and
interim basis to meet the new interim
disclosure requirement (discussed below).
For unfunded plans (e.g., for retiree health
benefits), we believe that the employers
disclosure of expected contributions for the
next fiscal year should reflect an amount that
is equal to the amount of expected benefit
payments less participant contributions
(similar to actual amounts reported in the
reconciliation of assets under FAS 132).Employers with a measurement date before
their fiscal year-end should discuss with their
actuaries the need for expected contribution
information to be disclosed in 2003 annual
reports. For a calendar year-end employer,
this will involve contributions expected to be
made in calendar year 2004, regardless of the
plans measurement date or plan year-end for
funding purposes.
Assumptions
Disclose, on a weighted-average basis, the
following assumptions used in accounting
for the plans: assumed discount rates, rates
of compensation increase (for pay-related
plans), and expected long-term rates ofreturn on plan assets specifying, in a tabular
format, the assumptions used to determine
the benefit obligation and the assumptions
used to determine net benefit cost.
Observation: The new rules require that
the assumptions used to measure expense
be presented separately from the
assumptions used to determine the benefit
obligation. Accordingly, the information
should not be combined in the disclosure. In
addition, the requirement to present the
information in a tabular format means thatemployers that previously disclosed
assumptions in a narrative format will need
to change to the new prescribed format.
Measurement Date
Disclose the measurement date(s) used to
determine pension and other postretirement
benefit measurements for the pension plans
and other postretirement benefit plans that
make up at least the majority of plan assets
and benefit obligations.
Interim Disclosure Requirements
Public entities shall disclose the following
information in their interim financial statements
that include a statement of income:
a. The amount of net periodic benefit cost
recognized for each period in which a
statement of income is presented,
showing separately the service cost
component, the interest cost component,
the expected return on plan assets for theperiod, the amortization of the
unrecognized transition obligation or
transition asset, the amount of recognized
gains and losses, the amount of prior
service cost recognized, and the amount
of gain or loss recognized due to a
settlement or curtailment.
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b. The total amount of employers
contribution paid, and expected to be
paid, during the current fiscal year, if
significantly different from amounts
previously disclosed.
Observation: Nonpublic companies arerequired to disclose the information in b
above in interim periods for which a
complete set of financial statements is
presented. Accordingly, all companies,
public and nonpublic, will need to monitor
contributions each quarter to identify
whether there will be a significant difference
between contribution amounts disclosed at
year-end and contributions in the current
quarter.
Effective Date and Transition
The provisions of FAS 132 remain in effect
until the provisions of FAS 132 (revised 2003)are adopted. Except as noted in FAS 132
(revised 2003), the statement is effective for
financial statements with fiscal years ending
after December 15, 2003. The interim period
disclosures are effective for interim periods
beginning after December 15, 2003. The
effective dates are summarized below:
Effective Date (years ending after/quarters beginning after)
Disclosure Domestic Plans
Foreign Plans /
Nonpublic Entities
Plan Assets 12/15/2003 6/15/2004
ABO 12/15/2003 6/15/2004
Estimated future benefit
payments
6/15/2004 6/15/2004
Estimated contributions 12/15/2003 6/15/2004
Assumptions 12/15/2003 12/15/2003
Measurement date(s) 12/15/2003 6/15/2004
Interim period disclosures Interim periods beginning
after 12/15/2003
Interim periods beginning
after 12/15/2003
Observation: For purposes of applying the
effective date provisions of the statement,
we understand that the FASB Staff believes
that the Boards intent is for the term foreign
plans to connote plans that are outside of
the domicile of the company. For example,
a U.S. company would treat its UK plan as a
foreign plan and its U.S. plan as a domesticplan. Likewise, a UK company would treat
its U.S. plan as a foreign plan and its UK
plan as a domestic plan.
In transitioning to the new standard,
companies are required to restate their
disclosures for earlier annual periods and
include in those disclosures the percentage
of each major category of plan assets held,
the ABO, and the assumptions used in the
accounting for the plans. The disclosures
for earlier interim periods also need to be
restated to include disclosure of the
components of net benefit cost. If getting
this information for the earlier periods is not
practicable, the disclosures should include
whatever information is available andidentify the information that is not available.
Exhibit A provides a comparison of the
disclosures required by FAS 132 (revised
2003) to previous authoritative guidance and
includes additional PwC observations.
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Exhibit A: Comparison of Original FAS 87/88/106 Disclosures, FAS 132 Disclosures andFAS 132 (revised 2003) Required Disclosures
FAS 87/88/106 FAS 132 FAS 132 (Revised 2003) Observations
Not required. Reconciliation ofobligations and planassets from one year tothe next including changes
due to amendments,acquisitions, divestitures,actuarial gains and losses
and benefits paid.
No change from FAS132.
No change fromcurrently requireddisclosures.
Funded status of theplan (obligation less
assets) reconciled toamounts reported inthe balance sheet,
with separatedisclosure ofoverfunded and
underfunded plansand U.S. and non-U.S. plans.
Funded status reconciledto amounts reported in
the balance sheet for allplans combined; forunderfunded plans with
the accumulated benefitobligation in excess ofplan assets under FAS
87, the aggregateobligations and fair valueof plan assets; non-U.S.
plans may be combinedwith U.S. plans unlessbenefit obligations
outside the U.S. aresignificant.
No significant changefrom FAS 132; continue
to show projected benefitobligation and/oraccumulated
postretirement benefitobligation, unamortizedprior service cost,
unrecognized gain/loss,unamortized transitionobligation/asset, net
prepaid asset/liability,intangible assets and theamount in other
comprehensive income.
No change fromcurrently required
disclosures.
No requirement. No requirement. Table of plan asset
allocation by assetcategory (equitysecurities, debt securities,
real estate and otherassets) showing thepercentage of the fair
value to total plan assets,a narrative description ofinvestment policies and
strategies, including thetarget allocationpercentages (if used by
the employer), and a
narrative description ofthe basis used to
determine the overallexpected long-term rateof return on assets.
Gathering the
information necessaryfor these disclosuresmay be challenging,
especially for entitieswith multiple plans,non-US plans, and
multiple serviceproviders. Employersshould communicate
with their serviceproviders to ensurethat they can obtain
necessary information
on a timely basis.
Alternative measuresof the pension benefitobligation, including
No longer required. Accumulated benefitobligation (ABO) underFAS 87 for all plans
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FAS 87/88/106 FAS 132 FAS 132 (Revised 2003) Observations
the vested benefitobligation and theaccumulated benefit
obligation; the
portions of OPEBobligation attributable
to retirees, fullyeligible employees,and other active
employees.
combined. Employersthat aggregatedisclosures about
pension plans with assets
in excess of the ABO andpension plans with assets
less than the ABO arerequired to separatelydisclose the aggregate
ABO and aggregate fairvalue of plan assets forpension plans with ABOs
in excess of plan assets.
No requirement. No requirement. The gross expectedbenefit payments (i.e.,
benefits attributable topast and estimated futureservice of current plan
participants) for each ofthe next five fiscal yearsand in the aggregate for
the five fiscal yearsthereafter based on thesame assumptions used
to measure theemployers benefitobligation at the end of
the year.
Gathering theinformation
necessary for thisdisclosure may bedifficult, as most
actuarial reports donot present grossexpected benefit
payments.
No requirement. No requirement. Employers best estimate,
as soon as it can bereasonably determined,of contributions expectedto be paid to the plan
during the next fiscalyear.
Companies will need
to request theiractuaries to estimatethe minimum fundingrequirement for the
next fiscal year (i.e.,not the next year thatbegins with the date
after the latestregular annualmeasurement date
and ends with thenext regular annualmeasurement date).
Such estimates maybe different than theactuarial valuations
developed for fundingpurposes, whichrelate to the plan year
and may beperformedsubsequent to the
time when year-end
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FAS 87/88/106 FAS 132 FAS 132 (Revised 2003) Observations
disclosures areprepared. Employerswith multiple plans
and multiple service
providers should begathering this
information now fordisclosure in 2003financial statements.
In addition, thisinformation shouldbe reviewed quarterly
and managementshould assess anyplanned contributions
on an annual andinterim basis to meetthe new interim
disclosurerequirement(discussed below).
Components ofexpense (servicecost, interest cost,
actual return on planassets, netamortization of
deferred amounts).
Same, except showexpected return on planassets instead of actual
return on plan assets,show amortizationamounts separately, and
show any gain/lossresulting from asettlement or curtailment.
No change from FAS132.
No change fromcurrently requireddisclosures.
No requirement. Amount of additionalminimum liability underFAS 87 recognized as an
intangible asset, othercomprehensive income,and accumulated other
comprehensive income.
No change from FAS132.
No change fromcurrently requireddisclosures.
Principal actuarialassumptions:
weighted-averagediscount rate, salary
increases, expectedlong-term rate ofreturn on planassets, and health
care cost trend rates(initial, ultimate andnumber of years to
ultimate rate).
Same. Same, but identifyassumptions used for
expense measurementand for year-end
obligation measurement,and present in tabularformat
This information isrequired to be
presented in a table,with the assumptions
used for measuringexpense and thoseused for measuringthe obligation
separately disclosed.
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FAS 87/88/106 FAS 132 FAS 132 (Revised 2003) Observations
No provision. No provision. Measurement dates usedto measure the pensionand other postretirement
benefit amounts.
All employers mustdisclose theirmeasurement dates,
even if the date
coincides with theirfiscal year-end.
The effect of a one-percentage-pointincrease in the
assumed health carecost trend rate onthe aggregate of the
service and interestcost components ofthe net periodic
postretirementbenefit cost and theaccumulated
postretirementbenefit obligation.
The effects of a one-percentage-pointincrease and decrease
in the assumed healthcare cost trend rate onthe aggregate of the
service and interest costcomponents of the netperiodic postretirement
benefit cost and theaccumulatedpostretirement benefit
obligation.
No change from FAS132.
No change fromcurrently requireddisclosures.
Amounts and types
of securities of theemployer andrelated parties
included in planassets.
Amounts and types of
securities of the employerand related partiesincluded in plan assets,
approximate amount offuture benefits covered byinsurance contracts
issued by the employer orrelated parties, and any
significant transactionsbetween the plan and theemployer or relatedparties during the period.
No change from FAS
132.
No change from
currently requireddisclosures.
Any alternativeamortization methodused to amortize
prior serviceamounts orunrecognized
actuarial gains orlosses.
Same. No change from FAS132.
No change fromcurrently requireddisclosures.
Any substantive
commitment used asthe basis foraccounting.
Same. No change from FAS
132.
No change from
currently requireddisclosures.
The gain or lossrecognized for asettlement or
Same. No change from FAS132.
No change fromcurrently requireddisclosures.
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FAS 87/88/106 FAS 132 FAS 132 (Revised 2003) Observations
curtailment, and thecost of providingspecial or contractual
termination benefits,
and a description ofthe nature of the
event.
Cost related todefined contribution
plans.
Same, plus a descriptionof the nature and effect of
any significant changesduring the periodaffecting comparability.
No change from FAS132.
No change fromcurrently required
disclosures.
Separate disclosuresof cost related topension and post-
retirement benefitmultiemployer plans.
Aggregate contributionsto multiemployer plans.
No change from FAS132.
No change fromcurrently requireddisclosures.
Description of the
plan includinggroups covered,type of benefit
formula, fundingpolicy, types ofassets held,
significant non-benefit liabilities, andsignificant matters
affecting
comparability.
No longer required. No change from FAS
132.
No change from
currently requireddisclosures.
No provision. No provision. Quarterly disclosure of
the expense for thequarter and thecomponents of expense,
and any significantchanges to the prior year-end disclosures regarding
expected contributions.
Additional efforts may
be required to gatherthe necessaryinformation to meet
these interimdisclosurerequirements. These
efforts may begreater for thoseentities with multiple
plans, multiple
service providers,and foreign plans.
Because quarterlypension andpostretirement benefit
cost will now bedisclosed,fluctuations in
reported expense
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FAS 87/88/106 FAS 132 FAS 132 (Revised 2003) Observations
may result whenestimates of expensereported in previous
quarters of the year
must be trued-up forthe results of
actuarial valuationscompleted after thefirst quarter of the
year. In addition,consideration ofcontributions to be
made, both requiredand discretionary,should be assessed
quarterly.
Exhibit B is a copy of a sample disclosure as
presented in Appendix C of FAS 132
(revised 2003).
Observation: The illustration taken from
FAS 132 (revised 2003) shows two years of
information for the components of net
periodic benefit cost and the weighted-
average assumptions used to determine net
periodic benefit cost for the years ended
December 31. However, paragraph 5 of
FAS 132 (revised 2003) requires that
amounts related to the employers results of
operations be disclosed for each period for
which an income statement is presented.
Because public companies present income
statements for three years, we believe that
the tables showing components of cost and
related assumptions should be presented
with three years of information.
Exhibit B: Disclosures about Pension and Other Postretirement Benefit Plans in the
Annual Financial Statements of a Publicly Traded Entity (Copied from FAS 132(revised 2003))
Illustration 1Disclosures about Pension and Other Postretirement Benefit Plans in the Annual FinancialStatements of a Publicly Traded Entity (Copied from FAS 132 (revised 2003))
C2. The following illustrates the fiscal 20X3 financial statement disclosures for an employer (Company A) withmultiple defined benefit pension plans and other postretirement benefit plans. Narrative descriptions of the basisused to determine the overall expected long-term rate-of-return-on-assets assumption (paragraph 5(d)(3)) andinvestment policies and strategies for plan assets (paragraph 5(d)(2)) are not included in this illustration. Thesenarrative descriptions are meant to be entity-specific and should reflect an entitys basis for selecting the expectedlong-term rate-of-return-on assets assumption and the most important investment policies and strategies.
C3. During 20X3, Company A acquired FV Industries and amended its plans. For one of the defined benefitpension plans, the accumulated benefit obligation exceeds the fair value of plan assets, and Company Arecognized an additional minimum liability in accordance with the provisions of paragraphs 36 and 37 ofStatement 87.
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Notes to Financial Statements
Pension and Other Postretirement Benefit Plans
Company A has both funded and unfunded noncontributory defined benefit pension plans that together coversubstantially all of its employees. The plans provide defined benefits based on years of service and final averagesalary.
Company A also has other postretirement benefit plans covering substantially all of its employees. The healthcare plans are contributory with participants contributions adjusted annually; the life insurance plans arenoncontributory. The accounting for the health care plans anticipates future cost-sharing changes to the writtenplans that are consistent with the companys expressed intent to increase retiree contributions eachyear by 50 percent of health care cost increases in excess of 6 percent. The postretirement health care plansinclude a limit on the companys share of costs for recent and future retirees.
Company A acquired FV Industries on December 27, 20X3, including its pension plans and other postretirementbenefit plans. Amendments made at the end of 20X3 to Company As plans increased the pension benefitobligations by $70 and reduced the other postretirement benefit obligations by $75.
Company A uses a December 31 measurement date for the majority of its plans.
Obligations and Funded Status
At December 31Pension Benefits Other Benefits
20X3 20X2 20X3 20X2Change in benefit obligation
Benefit obligation at beginning of year $1,246 $1,200 $ 742 $ 712Service cost 76 72 36 32Interest cost 90 88 55 55Plan participants contributions 20 13Amendments 70 (75)Actuarial loss 20 25Acquisition 900 600
Benefits paid (125) (114) (90) (70)Benefit obligation at end of year 2,277 1,246 1,313 742
Change in plan assetsFair value of plan assets at beginning of year 1,068 894 206 87Actual return on plan assets 29 188 5 24Acquisition 1,000 25Employer contribution 75 100 137 152Plan participants contributions 20 13Benefits paid (125) (114) (90) (70)Fair value of plan assets at end of year 2,047 1,068 303 206Funded status (230) (178) (1,010) (536)Unrecognized net actuarial loss (gain) 94 18 (11) (48)Unrecognized prior service cost (benefit) 210 160 (92) (22)
Net amount recognized $ 74 $ 0 $(1,113) $ (606)
Note: Nonpublic entities are not required to provide information in the above tables; they are required todisclose the employers contributions, participants contributions, benefit payments, funded status, and
the net amount recognized.
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Amounts recognized in the statement of financial position consist of:
Pension Benefits Other Benefits
20X3 20X2 20X3 20X2Prepaid benefit cost $ 227 $ 127 $ 0 $ 0Accrued benefit cost (236) (180) (1,113) (606)Intangible assets 50 53 0 0
Accumulated other comprehensive income 33 0 0 0Net amount recognized $ 74 $ 0 $(1,113) $(606)
The accumulated benefit obligation for all defined benefit pension plans was $1,300 and $850 at December 31,20X3, and 20X2, respectively.
Information for pension plans with an accumulated benefit obligation in excess of plan assets
December 31
20X3 20X2
Projected benefit obligation $263 $247Accumulated benefit obligation 237 222Fair value of plan assets 84 95
Components of Net Periodic Benefit CostPension Benefits Other Benefits
20X3 20X2 20X3 20X2
Service cost $ 76 $ 72 $ 36 $32Interest cost 90 88 55 55Expected return on plan assets (85) (76) (17) (8)Amortization of prior service cost 20 16 (5) (5)Amortization of net (gain) loss 0 0 0 0Net periodic benefit cost $101 $100 $ 69 $74
Note: Nonpublic entities are not required to separately disclose components of net periodic benefit cost.
Additional Information Pension Benefits Other Benefits
20X3 20X2 20X3 20X2
Increase in minimum liability included inother comprehensive income $33 $0 N/A N/A
Assumptions
Weighted-average assumptions used
to determine benefit obligations at
December 31Pension Benefits Other Benefits
20X3 20X2 20X3 20X2Discount rate 6.75% 7.25% 7.00% 7.50%
Rate of compensation increase 4.25 4.50
Weighted-average assumptions used
to determine net periodic benefit costfor years ended December 31
Pension Benefits Other Benefits20X3 20X2 20X3 20X2
Discount rate 7.25% 7.50% 7.50% 7.75%Expected long-term return on plan assets 8.00 8.50 8.10 8.75Rate of compensation increase 4.50 4.75
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(Entity-specific narrative description of the basis used to determine the overall expected long-term rate of returnon assets, as described in paragraph 5(d)(3) would be included here.)
Assumed health care cost trend rates at
December 3120X3 20X2
Health care cost trend rate assumed for next year 12% 12.5%Rate to which the cost trend rate is assumed todecline (the ultimate trend rate) 6% 5%Year that the rate reaches the ultimate trend rate 20X9 20X9
Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans.A one-percentage-point change in assumed health care cost trend rates would have the following effects:
1-Percentage- 1-Percentage-
Point Increase Point DecreaseEffect on total of service and interest cost $ 22 $ (20)Effect on postretirement benefit obligation 173 (156)
Note: Nonpublic entities are not required to provide the above information about the impact of a one-
percentage-point increase and one-percentage-point decrease in the assumed health care cost trend rates.
Plan Assets
Company As pension plan weighted-average asset allocations at December 31, 20X3, and 20X2, by assetcategory are as follows:
Plan Assetsat December 31
20X3 20X2Asset Category
Equity securities 50% 48%Debt securities 30 31Real estate 10 12Other 10 9Total 100% 100%
(Entity specific narrative description of investment policies and strategies for plan assets, including weighted-average target asset allocations [if used as part of those policies and strategies] as described in paragraph 5(d)(2)would be included here.)
Equity securities include Company A common stock in the amounts of $80 million (4 percent of total planassets) and $64 million (6 percent of total plan assets) at December 31, 20X3, and 20X2, respectively.
Company As other postretirement benefit plan weighted-average asset allocations at December 31, 20X3, and20X2, by asset category are as follows:
Plan Assets
at December 3120X3 20X2
Asset Category
Equity securities 60% 52%Debt securities 30 27Real estate 5 13Other 5 8Total 100% 100%
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8/3/2019 PWC fas 132
14/14
HRS Insight 04/02 January 12, 200414
Equity securities include Company A common stock in the amounts of $12 million (4 percent of total planassets) and $8 million (4 percent of total plan assets) at December 31, 20X3, and 20X2, respectively.
Cash Flows
Contributions
Company A expects to contribute $125 million to its pension plan and $150 million to its other postretirementbenefit plan in 20X4.
Estimated Future Benefit Payments
The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid:
Pension OtherBenefits Benefits
20X4 $ 200 $15020X5 208 15520X6 215 16020X7 225 16520X8 235 170
Years 20X9-20Y3 1,352 984
How We Can Help
PricewaterhouseCoopers can help youconsider the effects of the new FASBdisclosure rules, including helping you
assess the impact of the final standard onyour actuarial valuation process anddisclosure requirements. PwC has
considerable experience helping clients
with FAS 87 and FAS 106 accounting, andrelated actuarial and measurement issues.We encourage companies to quickly
determine the additional information thatmay result from the issuance of FAS 132(revised 2003).
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