About GASB 68

Governmental Accounting Standards Board (GASB) - Statement No.68, Accounting and Financial Reporting for Pensions, requires employers participating in the plans to report expanded information concerning pensions in their financial statements, as well as their proportionate share of the Net Pension Liability effective for fiscal years beginning after June 15, 2014.

This statement replaces the requirements under GASB Statement No. 27, Accounting for Pensions by State and Local Governmental Employers, and Statement No. 50, Pension Disclosures. Statement No. 68 significantly changes employer reporting of pension assets and liabilities at the entity-wide and enterprise-fund level. 

Previously, employers were only required to record a pension liability or asset when they did not make the required annual contribution (liability) or made a contribution in excess of the required annual contribution (asset) to the plan. However, this pension standard requires immediate recognition of the net long-term liability of future pension benefits in excess of accumulated plan assets.  This Statement applies to pension reporting for the sponsoring state or local governmental entity, and is effective for fiscal years beginning after June 15, 2014. Employers with a fiscal year ending of December 31 implemented this standard in the fiscal year ending December 31, 2015.

Distinctions are made regarding the particular requirements depending upon the type of pension plan administered, as follows:

• Agent multiple-employer pension plans – those in which plan assets are pooled for investment purposes but separate accounts are maintained for each individual employer so that each employer’s share of the pooled assets is legally available to pay the benefits of only its employees.
• Cost-sharing multiple-employer pension plans – those in which the pension obligations to the employees of more than one employer are pooled and plan assets can be used to pay the benefits of the employees of any employer that provides pensions through the pension plan.

FPPA administers cost-sharing multiple-employer pension plans (Statewide Retirement Plan with 252 employer departments), a single-employer plan (Colorado Springs New Hire Plan) as well as agent multiple-employer pension plans (50 old hire plans and 174 volunteer firefighter plans). The Statewide Death & Disability Plan has been determined to report under other postemployment benefit plan guidance.

The biggest change affects a local government’s net pension liability (NPL) — often called an unfunded actuarial accrued liability (UAAL). This is the difference between what a local government or special district owes for its pension and the assets that have been accumulated towards that pension’s liability. 

In the past, the unfunded liability was disclosed in the notes of the financial statements, and as long as your local government/special district made its required annual contributions, there was no liability reported on the balance sheet. This standard has the NPL on the local government/special district’s financial statement balance sheet and requires recognition of the expense. It also requires restating the beginning balance sheet liability for the year of implementation and restating deferred inflows/outflows of resources.

For more information on Statement No. 68, visit the GASB website.

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