ASC 715 applies to all arrangements that are in substance pension plans. It does not provide guidance to determine whether an arrangement constitutes a pension plan. That determination depends on the particular facts and circumstances of each case. A key characteristic of a pension plan is that benefits would be available to all employees or to a group of employees who meet stipulated eligibility criteria that define who may participate in the plan and when they may join.

ASC 715 applies to employers' arrangements to provide pension or other postretirement health and welfare benefits to their employees through defined benefit single employer or multiemployer pension and OPEB plans, as well as defined contribution pension and OPEB plans.

Postretirement benefit plans are not limited to legally enforceable contracts. Any arrangement that is in substance a postretirement benefit plan, regardless of its form, is covered by ASC 715. The plan may be written, or there may be an unwritten promise to provide benefits that arises from a past practice of paying benefits or from oral representations made to employees. In certain instances, the written plan may not embody the entire agreement, but may be supplemented by provisions that exist in substance due to past practice or an employer's intended actions as communicated to participants.

When assessing whether an aggregation of deferred compensation contracts is the equivalent of a pension plan or a postretirement benefit plan, factors to consider include:

These considerations are important conceptual criteria that should be used in evaluating whether an aggregation of deferred compensation contracts is the equivalent of a pension plan or a postretirement benefit plan. The criteria, however, are not intended to be a checklist. Instead, the determination should be based on the weight of the evidence and a decision about what most accurately reflects the nature of the arrangements.

Questions PEB 1-1 through PEB 1-5 discuss the determination of whether a benefit arrangement is within the scope of ASC 715 or ASC 710.

Generally, no. A key characteristic of a pension plan is that benefits would be available to all employees or to a group of employees that meet stipulated eligibility criteria that define who may participate in the plan and when they may join. Benefits that are negotiated individually between a reporting entity and one of its officers or other employees are generally not within the scope of ASC 715.

A SERP with, in essence, only a single participant should be accounted for as a deferred compensation arrangement pursuant to the guidance in ASC 710-10-25-9 through ASC 710-10-25-11. The delayed recognition principles for certain gains and losses in ASC 715 would not apply.

If, however, (a) the SERP contains stipulated eligibility criteria, but the CEO is the only participant because he is the only employee that currently meets those criteria and (b) it is expected that additional employees will become eligible to participate in the SERP in the future and would receive similar benefits, the SERP may be considered a pension plan within the scope of ASC 715.

Generally, yes. A key characteristic of a pension plan is that benefits would be available to all employees or to a group of employees. In this fact pattern, the same benefit is provided to all executives, and is expected to continue to be offered. Therefore, in substance, the group of arrangements constitutes a postretirement benefit plan subject to the guidance in ASC 715.

Generally, no. These arrangements would be accounted for as individual deferred compensation contracts in accordance with ASC 710. This is because the benefit levels differ, as well as the fact that the benefits may not be consistently offered.

Generally, yes, this would be treated as a pension or postretirement benefit plan subject to ASC 715. This is because the plan is formula driven, and the benefits are consistently offered to eligible members of a group, even though the benefits may vary by employee class. If individual deferred compensation contracts with multiple employees are equivalent to a pension plan when taken together, they should be accounted for in accordance with ASC 715.

Generally, no. Even though the benefits are technically covered by the same “plan document,” the plan is not offered consistently, nor is there a consistent benefit formula to determine the level of benefits to be provided (in other words, the benefits are more discretionary). Therefore, the substance of this arrangement is a series of individual deferred compensation contracts that would be accounted for in accordance with ASC 710.