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Reporting Pensions

Reporting Pensions. Under GASB 68. Pension debt. Authority. GASB Statement 68 – Accounting and Financial Reporting for Pensions GASB 68 Implementation Guide Effective for fiscal year 2015. Presenters. Mark Whelan, CPA Chief Financial Officer, Kentucky Teachers’ Retirement System

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Reporting Pensions

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  1. Reporting Pensions Under GASB 68 KASBO - Spring 2014

  2. KASBO - Spring 2014

  3. Pension debt KASBO - Spring 2014

  4. Authority • GASB Statement 68 – Accounting and Financial Reporting for Pensions • GASB 68 Implementation Guide Effective for fiscal year 2015 KASBO - Spring 2014

  5. Presenters Mark Whelan, CPA Chief Financial Officer, Kentucky Teachers’ Retirement System 502.848.8640 mark.whelan@ky.gov Todd Coleman, CPA Controller, Kentucky Retirement System 502.696.8453 todd.coleman@kyret.ky.gov Susan Barkley, CPA Assistant Director, Kentucky Department of Education 502.564.3930, ext 4437 susan.barkley@education.ky.gov KASBO - Spring 2014

  6. Terminology Old New Actuarial Accrued Liability (AAL) Unfunded Actuarial Accrued Liability (UAAL) Total Pension Liability (TPL) Net Pension Liability (NPL) KASBO - Spring 2014

  7. Key Changes • The part of total pension liability not covered by plan assets = net pension liability (NPL) • NPL is a liability on entity-wide statements • Changes in calculating NPL • Some components are expensed • Some are deferred outflows/inflows KASBO - Spring 2014

  8. NPL TPL – fair value of plan assets = NPL KASBO - Spring 2014

  9. Actuarial Valuation • Actuarial valuation will contain: • TPL • Components of change in NPL • Information needed for note disclosures • Proportionate share determined by actuaries or retirement plan KASBO - Spring 2014

  10. Changes in NPL Most will be an expense in the period of the change • Service cost • Interest on TPL • Benefit changes • Projected earnings on pension plan investments KASBO - Spring 2014

  11. Changes in NPL • Some components are deferred outflow/inflow • Amortized over average of expected remaining service lives • Difference between expected and actual performance • Changes of assumptions • Change in proportionate share • Difference between proportionate share of all contributions and employer’s contributions KASBO - Spring 2014

  12. Investment Earnings • Amortized over 5 years only • Report net deferred outflow/inflow from this component KASBO - Spring 2014

  13. Amortization • Must track each component separately • Must track each year separately • Use the appropriate time period for each KASBO - Spring 2014

  14. KASBO - Spring 2014

  15. Special Funding Situation • Nonemployer contributing entity (state) • Legal requirement to contribute directly • Federal grants? No • Districts must record revenue and expense equal to its proportionate share of state contributions – change in NPL KASBO - Spring 2014

  16. Fund Statements Nothing changes due to GASB 68 KASBO - Spring 2014

  17. Entity-wide Statements • NPL as a liability • On-behalf revenue for state contributions • Deferred outflows/inflows amortized (by function) • If the NPL change results in a net credit, use expense anyway, not revenue KASBO - Spring 2014

  18. Enterprise Funds • Full accrual basis • These funds show part of NPL and other stuff on their statements, too KASBO - Spring 2014

  19. To Get Started in FY 15 • Prior period adjustment on Statement of Activities • Need beginning of year NPL (at 7/1/14) Dr. Net position (beginning) Cr. Pension liability • Beginning deferred outflow/inflow can be $0 first year KASBO - Spring 2014

  20. Note Disclosures • Lots! • Descriptive information about the plan • Significant assumptions in TPL • Changes of assumptions • Pension expense • Deferred outflows/inflows by component for this period and future periods • Proportionate share information KASBO - Spring 2014

  21. RSI • 10-year schedules • These build over time, can start FY 15 with one year • Proportionate share • Covered payroll • Plan net position as % of TPL • Show state and district shares KASBO - Spring 2014

  22. OPEB • Not included in scope of GASB 68 • Will likely be addressed in a future standard • Districts will have to record it (amount paid for medical insurance fund) KASBO - Spring 2014

  23. KASBO - Spring 2014

  24. Our Plans KTRS CERS Defined benefit Cost-sharing multiple employer plan Special funding situation State will recognize 100% of NPL Note disclosures req’d Defined benefit Cost-sharing multiple employer plan NO special funding situation Districts recognize proportionate share of NPL Note disclosures req’d KASBO - Spring 2014

  25. Looking Ahead • CERS info will come from KRS actuaries • Expect a template to show proportionate share info January 2015 • Use the FY 14 actuarial valuation for the district FY 15 financial statements KASBO - Spring 2014

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