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13.5 Multiemployer plans
Publication date: 31 Mar 2024
us Financial statement presentation guide
A multiemployer plan is a pension or OPEB plan to which two or more unrelated reporting entities contribute. The assets of the plan are commingled and can be used to provide benefits to employees of any of the participating reporting entities. These plans are usually, but not always, pursuant to a collective bargaining agreement. A reporting entity accounts for its participation in a defined benefit multiemployer plan by recognizing expense in the amount of contributions to the plan when they are required to be made, without any accrual of future contributions or consideration of the funded status of the plan.
13.5.1 Multiemployer pension plans
The disclosure requirements of ASC 715-80-50 are intended to provide information about a reporting entity's financial obligations to a multiemployer pension plan and to help financial statement users better understand the financial health of all of the significant plans in which the reporting entity participates. A reporting entity should provide a narrative description of the nature of, and its participation in, any multiemployer plans, indicating how the risks of participating in these plans differ from those of a single-employer plan.
As discussed in ASC 715-80-50-6, a reporting entity should also provide a description of any significant changes that affect the comparability of total reporting entity contributions from period to period, including from a business combination or divestiture, a change in the reporting entity contribution rate, or a change in the number of employees covered by the plan during the year.
As discussed in ASC 715-80-50-9, a reporting entity should disclose the total contributions, in the aggregate, made to all other multiemployer plans that are not individually significant, and the total contributions, in the aggregate, to all multiemployer plans.
ASC 715-80-55-6 through ASC 715-80-55-8 illustrate the disclosure requirements for multiemployer pension plans.
13.5.1.1 Plan information is available in the public domain
When information about the plan is available in the public domain (e.g., a Form 5500 for US plans), as discussed in ASC 715-80-50-5, a reporting entity should disclose the following for each individually significant plan:
- Plan's legal name and Employer Identification Number
- For each balance sheet presented, the plan's "zone status" (a color-coded designation based on the funded status of the plan), as defined by the Pension Protection Act of 2006 (the Act) or a subsequent amendment of the Act, or, if the zone status is not available, whether the plan was less than 65% funded, between 65% and 80% funded, or 80% or more funded
- For each period that an income statement is presented, the amount of the employer's contributions, whether those contributions represent more than 5% of total contributions to the plan per the plan's most recently available annual report (Form 5500 for US plans), and the year-end date of the plan to which the annual report relates
- Expiration dates of collective bargaining agreements, if applicable
- For the most recent annual period presented, whether the plan is subject to a funding improvement plan, whether the reporting entity paid a surcharge to the plan, and a description of any minimum contributions required in future periods
The guidance does not define the term "significant." When determining whether a plan is individually significant, a reporting entity should consider not only its contributions to the plan but other factors, such as the severity of the underfunded status of the plan and the relative proportion of the employer's participation in the plan.
These disclosure requirements are applicable for US and non-US plans, although obtaining some of this information for non-US plans may be more challenging. Reporting entities may also face other challenges for US or non-US plans, including obtaining the information necessary to prepare the disclosures on a timely basis. Some information may be unavailable at the financial statement date. In these cases, reporting entities should use the most recent information available (which may, for example, relate to a prior fiscal year) and disclose the year-end to which the information relates.
13.5.1.2 Plan information is not available in the public domain
As discussed in ASC 715-80-50-7, when plan information is not available in the public domain, a reporting entity should disclose, in addition to the information described in FSP 13.5.1.1, the nature of the benefits, a qualitative description of the extent to which the reporting entity could be responsible for the obligations of the plan, and other quantitative information about the plan, such as the total plan assets, the actuarial present value of accumulated plan benefits, and the total contributions received by the plan. In addition, if this information is not available without undue cost or effort, a reporting entity should describe what information was omitted and the reason it was omitted, and provide alternative information to meet the overall disclosure objectives.
13.5.2 Multiemployer other postretirement plans
As discussed in ASC 715-80-50-11, a reporting entity that participates in a multiemployer plan that provides OPEB benefits (such as retiree medical benefits) should disclose the amount of contributions made to the plan, the nature of the benefits provided, and the types of employees covered by these benefits.
A reporting entity should also provide a description of any significant changes that affect the comparability of its total contributions from period to period, including from a business combination or divestiture, a change in its contribution rate, or a change in the number of employees covered by the plan during the year.
13.5.3 Potential withdrawal or increase in contribution level
As discussed in ASC 715-80-50-2, if withdrawal from a multiemployer plan would give rise to a liability and withdrawal is probable, the liability should be accrued. If withdrawal is reasonably possible, disclosure of the possible withdrawal liability should be made. Similar consideration should be given if it is either probable or reasonably possible that a reporting entity's contribution to the plan will increase in the future. A liability is generally required only if the increased future contributions are probable and relate to periods covered by the financial statements or earlier periods. If the employer is not required to recognize a liability, increases in future employer contributions that are reasonably possible should be disclosed.
PwC. All rights reserved. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.
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