The guidance in ASC 715, Compensation—retirement benefits, applies to an employer’s accounting for pension plans, as well as postretirement benefits other than pensions. Specifically, ASC 715-30, Defined Benefit Plans—Pension, contains guidance for recognition and measurement of pension costs and obligations. ASC 715-60, Defined Benefit Plans—Other Postretirement, prescribes the methodology for measuring and recording other postretirement benefit (OPEB) costs and obligations.
The accounting concept underlying ASC 715 is straightforward: an employer's promise to provide employees with postretirement benefits represents a form of deferred compensation. The cost of those benefits should be recognized systematically over employees' service periods. The methodology for measuring and recording pension and OPEB costs and obligations is similar in many respects, including the accounting for settlements of benefit obligations and curtailments (reductions or terminations) of the accrual of benefits.
Therefore, because of the similarities between accounting for pensions and accounting for other postretirement benefits, the accounting for both have been combined in this guide, and generally referenced collectively as pension plans. When the guidance for OPEB benefits differs from pension benefits, the guidance will refer to OPEB plans specifically.
This guide covers the more significant accounting aspects of ASC 715, including:
  • Defined benefit versus defined contribution plans (PEB 1)
  • Measurement of benefits and attribution of benefits to past, current, and future service (PEB 2)
  • Recognition of net periodic benefit cost (PEB 3)
  • Significant events (e.g., settlement and curtailments) (PEB 4)
  • Multiemployer and multiple-employer plans (PEB 5)
PEB 6 through PEB 8 cover other types of employee benefit arrangements not subject to ASC 715, including benefits provided during employment, deferred compensation, termination benefits, and other postemployment benefits.
Income tax implications of pension and OPEB plans are discussed in TX 5 and TX 12. Disclosures for pension and OPEB plans are discussed in FSP 13.
PEB 9 covers presentation and disclosure related to financial statements of employee benefit plans, including defined benefit plans, defined contribution plans, and health and welfare plans.
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