{"id":18999,"date":"2020-07-16T09:20:29","date_gmt":"2020-07-16T13:20:29","guid":{"rendered":"https:\/\/www.benefitscanada.com\/news\/accounting-standards-for-public-multi-employer-plans-require-updating-report-148068"},"modified":"2020-07-16T09:20:29","modified_gmt":"2020-07-16T13:20:29","slug":"accounting-standards-for-public-multi-employer-pension-plans-require-updating-report","status":"publish","type":"post","link":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/2020\/07\/16\/accounting-standards-for-public-multi-employer-pension-plans-require-updating-report\/","title":{"rendered":"Accounting standards for public multi-employer pension plans require updating: report"},"content":{"rendered":"
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\"123RF.com\/Nonwarit <\/div>\n<\/p><\/div>\n

Staff<\/span> | July 16, 2020 <\/p>\n

When Canadian taxpayers are on the hook for public sector pension plan obligations, these institutions must spell that out clearly in their financial reporting, according to a new paper by the C.D. Howe Institute.<\/p>\n

\u201cReporting of pension costs as they accrue and net obligations at a point in time is tricky,\u201d wrote William Robson, the organization\u2019s chief executive officer and the paper\u2019s author. \u201cPension payments will occur in the future \u2014 projecting even the simplest payment requires choosing a discount rate \u2014 and are subject to uncertainties such as longevity and future salaries.<\/p>\n

\u201cMany major pension plans in the broader public sector have benefits that are contingent on their funded status. Moreover, many major plans are multi-employer plans, even when governments are the unique or majority funders of the employers, it is not clear that governments are, or should be, responsible for funding shortfalls if a plan gets into trouble.\u201d<\/p>\n

Read: The impact of coronavirus on DB pension funding status, asset mix<\/a><\/strong><\/p>\n

Currently, the Public Sector Accounting Board is reviewing accounting standards that could affect the entities consolidated in government financial statements, noted the paper, which made several recommendations with the aim of fostering more complete reporting.<\/p>\n

\u201cA key one concerns public sector employers whose pension plans create exposure beyond the contributions they make each year, but show their annual contributions as their only cost and no pension-related obligations on their balance sheets,\u201d wrote Robson. \u201cWe need clearer criteria for identifying contingent pension plans \u2014 often referred to as target-benefit plans \u2014 that involve employer-side funding risk that is genuinely small enough to ignore.\u201d<\/p>\n

The paper noted that plan sponsors, administrators and members require increased clarity on who bears the risk in these scenarios. \u201cWhen employer-side risk is material, users of financial statements should see it. The best place to report it is in the financial statements of the employer. Some provincial governments currently show costs and obligations of pension plans in their broader public sectors that do not appear in the financial statements of the employers themselves.\u201d<\/p>\n

Read: DB regulations a bad fit for target-benefit plans, MEPPs: report<\/a><\/strong><\/p>\n

These situations are problematic, argued Robson, if a province chooses to increase support for public employer organizations with troubled pension plans. Such an active role by the province is inappropriate and poses the danger of leading employers and plan participants to expect a bailout if a plan is unable to meet its obligations.<\/p>\n

\u201cCanada\u2019s multi-employer contingent benefit plans are large and growing,\u201d wrote Robson. \u201cTransparency about their costs and who bears the risks in these plans needs to keep pace.\u201d<\/p>\n

Read the full article at BenefitsCanada.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Staff | July 16, 2020 When Canadian taxpayers are on the hook for public sector pension plan obligations, these institutions must spell that out clearly in their financial reporting, according to a new paper by the C.D....<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[],"tags":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/18999"}],"collection":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/comments?post=18999"}],"version-history":[{"count":0,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/18999\/revisions"}],"wp:attachment":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/media?parent=18999"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/categories?post=18999"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/tags?post=18999"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}