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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:
  • Do the arrangements exist in writing and have the approval of the employer's board of directors?
  • How many participants are encompassed by the arrangements?
  • Is the benefit provided to each participant identical or does each have a separately negotiated benefit arrangement?
  • Is there a reasonable expectation that there will be other employees from the same class (e.g., senior executive, executive, director) that will be provided with the same or similar arrangement in the future?
  • Is eligibility to participate discretionary or non-discretionary?
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.
Question PEB 1-1 discusses the determination of whether a benefit arrangement is within the scope of ASC 715 or ASC 710.
Question PEB 1-1
PEB Corporation has a supplemental executive retirement plan (SERP) that has one participant, the CEO. No other employees are permitted to participate in the plan. The SERP provides a benefit to be paid to the CEO after retirement that is based on compensation and years of service. PEB Corporation has no other defined benefit plans. Should the SERP be accounted for as a pension plan in accordance with ASC 715?
PwC response
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.

Question PEB 1-2 discusses the determination of whether a benefit arrangement is within the scope of ASC 715 or ASC 710.
Question PEB 1-2
PEB Corporation does not have a plan document; however, several executives have individual employment agreements that provide identical postretirement benefits. There is an expectation that future executives will also be provided with the same agreements. Would this group of contracts qualify as a plan accounted for in accordance with ASC 715?
PwC response
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.

Question PEB 1-3 discusses the determination of whether a benefit arrangement is within the scope of ASC 715 or ASC 710.
Question PEB 1-3
There is no plan document, but several executives of PEB Corporation have individual employment agreements that provide each executive with a differing level of postretirement benefits. Future executives may or may not be provided with similar agreements. Would this group of contracts qualify as a plan accounted for in accordance with ASC 715?
PwC response
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.
Question PEB 1-4 discusses the determination of whether a benefit arrangement is within the scope of ASC 715 or ASC 710.
Question PEB 1-4
PEB Corporation has a plan in which eligibility to participate is defined in a non-discretionary manner by class of employee (e.g., senior executive, executive, director). Each class of employee has a separate benefit formula. Would this arrangement qualify as a pension plan?
PwC response
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.

Question PEB 1-5 discusses the determination of whether a benefit arrangement is within the scope of ASC 715 or ASC 710.
Question PEB 1-5
PEB Corporation has a plan document and has approved three executives for participation at different times. However, each participant has been provided with a different benefit level. Future executives who are approved for participation may or may not receive the same level of benefits. Would these arrangements qualify as a plan accounted for in accordance with ASC 715?
PwC response
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.
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