Comparative Study of Accounting Standards for Reporting of Pension Plans

By Gurtej Singh Sadiora

The main objective of pension plan reporting in financial statements is to make sure a true picture of pension scheme is provided in the plan sponsor’s financial statements. The accounting standard boards issue accounting standards to guide and regulate reporting of pension plans. Accounting standard statements have their own objectives but the main idea is to make financial statements more transparent, consistent, easily understandable to user of accounts and represent them in a more faithful manner.

A comparative study of accounting standards issued by Financial Accounting Standards Board (FASB) in USA, UK Accounting Standard Board (ASB), International Accounting Standards and by The Council of the Institute of Chartered Accountants of India is presented in this paper.

Funding Regulations in U.S.A – The Pension Protection Act 2006

By Teja Ranade-Gadhoke

Prompted by the recent default of large defined benefit pension plans in the U.S.A. and the looming breakdown of the Pension Benefit Guarantee Corporation (PBGC) – the guarantor of the US pension plans, in the early part of 2005, the Bush administration proposed pension funding reforms which would make the minimum funding requirements of pension plans more stringent and in turn strengthen the pension insurance system.

On July 28, 2006, these reforms were passed by a majority vote by the House of Representatives as the Pension Protection Act 2006 (hereafter referred to as PPA). It is the most comprehensive set of pension reforms since the Employee Retirement Income Security Act (ERISA) enacted in 1974. These regulations apply to the funding of single-employer and multiple-employer benefit plans and come into effect starting with the first plan year beginning after 01/01/2008. This paper is intended to give a brief description of the key provisions of the Pension Protection Act 2006 and its contrast with the old funding regulations under ERISA.