In September 2010, the Financial Accounting Standards Board (FASB) issued an exposure draft of a proposed standard, Subtopic 715-80, which would require companies to disclose estimates of withdrawal liability as a proxy for their proportionate share of any underfunding in multiemployer defined benefit (DB) plans. They received a lot of commentary from various stakeholders (over 300 letters). Most of the feedback strongly opposed the use of estimated withdrawal liability, noting the extraordinary costs involved in preparing the calculations and seriously questioning the appropriateness or usefulness of those figures.

At its meeting on May 31, the FASB reached a conclusion similar to the majority. An employer would not have to disclose estimated withdrawal liabilities as proposed in the exposure draft.

While on the surface it seems as if additional information couldn t hurt, disclosure of withdrawal liability has too many problems. Significant variance in methodologies and assumptions used by multiemployer funds can often result in two similarly situated companies participating in different funds with similar funded percentage levels stating vastly different withdrawal liability exposures. Another problem is the lack of timeliness of withdrawal liability estimates. In many cases, the amounts could be more than a year out of date. Further distortions arise from pension law regulations that provide all sorts of exceptions and adjustments to withdrawal liability. For instance, certain industries have special rules that may exempt an employer from liability, and certain events can constitute no withdrawal or only a partial withdrawal. Ultimately, the biggest hurdle may have been the time and likely costs involved, because many legitimately voiced that disclosure as initially proposed would have been extremely burdensome and provided very little, if any, of the transparencies that the FASB desired.

As a substitute to the exposure draft requirements, the board tentatively approved a tabular disclosure of other items intended to give users enhanced information on the multiemployer plans to which a company makes material contributions on behalf of its employees. Among these items are plan identifying information, Pension Protection Act (PPA) zone status, PPA rehabilitation plan or funding improvement plan information, recent annual contributions, surcharges, and collective bargaining agreement (CBA) expiration dates.

The FASB may revisit other disclosures at a future meeting, including quantitative information on an employer's level of participation in a plan and expected future contributions. The FASB plans to have a final update issued by year-end, so discussion and decisions on these issues can be expected to occur rapidly.