GASB Approves Exposure Drafts for OPEB Accounting and Non-Trust Pension Benefits

The Governmental Accounting Standards Board (GASB) has approved the release of exposure drafts related to accounting for Other Postemployment Benefits (OPEB).


In 2004, GASB issued Statements No. 43 and No. 45, which established accounting standards for OPEB plans. These statements covered postemployment healthcare benefits, whether provided separately or as part of a defined benefit pension plan. The statements also covered other forms of postemployment benefits, such as life insurance and disability benefits, if such benefits were provided outside of a defined benefit pension plan. These statements generally followed the principles contained in Statements 25 and 27 for pension plans, which had been issued in 1994.

In 2012, GASB issued Statements No. 67 and No. 68 for pension plans, which (when fully effective) will replace Statements No. 25 and No. 27. After these statements were finalized, GASB started work on a project to determine whether the OPEB standards should be revised to parallel those changes that had been made for pension plans. The results of this project will be reflected in two exposure drafts, one covering accounting for OPEB trusts themselves, and one covering employer accounting for OPEB plans.

Exposure Drafts

GASB's news release on the exposure drafts can be found at this link.

It appears that substantially all of the requirements established for pension plans in Statements No. 67 and 68 are being proposed for OPEB plans. These include:

  • Discount rate: Projected benefits expected to be provided through trust assets are to be discounted at the long-term expected rate of return. Projected benefits not expected to be covered by trust assets are to be discounted at a 20-year tax exempt, high quality municipal bond index rate.
  • Actuarial cost method: The entry age normal cost method is mandated for all plans.
  • Balance sheet liability: The unfunded actuarial liability moves from the financial statement notes to the balance sheet. For employers in cost sharing multiple employer plans, an allocation of the liability will be made to each employer.
  • Annual Required Contribution (ARC): The ARC and Annual OPEB Cost will be eliminated and replaced with the OPEB Expense. OPEB Expense will be determined using substantially shorter amortization periods for actuarial gains and losses and changes in actuarial assumptions. The effects of plan changes will be recognized immediately.
  • Disclosures: The requirements for note disclosures and required supplementary information will be greatly expanded.

GASB will also be issuing a third exposure draft related to pension benefits not funded through a formal trust. Statement 68 excluded these benefits, which have remained subject to Statement No. 27. GASB will now be proposing standards that would bring these plans under Statement No. 68.

We expect the exposure drafts to be issued this month. Comments will be encouraged and are expected to be due by August 29, 2014. Public hearings will be scheduled on September 10, 11, and 12, 2014.

Cheiron will be providing more information on these exposure drafts after they are issued.

Cheiron is an actuarial consulting firm that provides actuarial and consulting advice. However, we are neither attorneys nor accountants. Therefore, we do not provide legal services or tax advice.