<nobr>Jun 1, 2006</nobr>

Major Employer Group Urges FASB Delay on Postretirement Benefits

The ERISA Industry Committee (ERIC), in comments filed May 31, urged the Financial Accounting Standards Board (FASB) to reconsider its piecemeal approach to changing the way employers account for their postretirement benefits programs on their corporate balance sheets.

While recognizing the need for transparent accounting and reporting, ERIC warned that the changes proposed by the FASB would actually undermine those goals by creating confusion among investors. ERIC cited specifically, the Board’s decision to move forward with balance sheet changes in Phase I of the proposal, while failing to fully investigate the appropriateness of the substantial new balance sheet liability until Phase II.

ERIC cited the current inclusion of the information in footnotes to corporate financial statements as evidence that an immediate change in balance sheet reporting is not needed. Given that FASB plans to investigate the appropriate composition and measurement of these liabilities in Phase II, ERIC urged that any changes to balance sheet requirements be made in a more coherent manner at that time.

Additionally, ERIC urged that FASB reconsider the measurement date of plan assets and obligations in the current proposal. FASB would require companies to report assets and benefit obligations as of the date of the employer’s financial statement. ERIC noted that such a requirement is not feasible for large, multinational companies who cannot possibly gather the required data in time to meet the SEC’s accelerated deadline dates. ERIC urged that FASB adopt the position of earlier standards requiring that assets and obligations be measured as of a date not more than three months before the financial statement.

<>“It is critical that FASB understand that the accounting standards for pensions and other postretirement benefits do not exist in a theoretical or even an accounting vacuum. The decisions they make have a real impact on the ability of companies to offer employees the benefits they are depending on when planning their retirement,” said Mark Ugoretz, ERIC president. “This very real world impact on millions of American workers requires that FASB not adopt a piecemeal approach that would greatly impact employee benefit plans before fully examining the appropriateness of those liability measures.”

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ERIC is a non-profit association committed to representing the advancement of the employee retirement, health, and compensation plans of America’s largest employers. ERIC’s members provide benchmark retirement, health care coverage, compensation and other economic security benefits directly to tens of millions of active and retired workers and their families. ERIC has a strong interest in proposals affecting its members’ ability to deliver those benefits, their cost and their effectiveness, as well as the role of those benefits in the American economy.

Contact
Mike Chittenden
Director, Communications
The ERISA Industry Committee
1400 L Street, N.W., Suite 350
Washington, DC 20005-3509
(202) 789-1400 Fax (202) 789-1120
e-mail: mchittenden@eric.org
www.eric.org

Text Files:

Click here for ERIC FASB comments.

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