GASB Approves New Statements for OPEB Accounting and Non-Trust Pension Benefits

The Governmental Accounting Standards Board (GASB) has approved two new statements related to accounting for Other Postemployment Benefits (OPEB). In addition, GASB also approved a new statement related to pension benefits not funded through a trust.


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 No. 25 and No. 27 for pension plans, which had been issued in 1994.

In 2012, GASB issued Statements No. 67 and No. 68 for pension plans, which have replaced Statements No. 25 and No. 27. These statements did not apply to pension benefits that were not provided through a trust.

In 2014, GASB issued two exposure drafts that would change the OPEB standards to parallel those changes that had been made for pension plans. At the same time, GASB issued an exposure draft with respect to pension benefits not funded through a trust.

New Statements

GASB's news release on the new statements can be found at this link.

New Statement No. 74 will replace Statement No. 43 effective for periods beginning after June 15, 2016. New Statement No. 75 will replace Statement No. 45 effective for fiscal years beginning after June 15, 2017. We understand that the new statements substantially follow the exposure drafts but with some modifications. Similar to what was done for pension plans, the new statements 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.
  • Disclosures: The requirements for note disclosures and required supplementary information will be greatly expanded.

GASB also approved new Statement No. 73 related to pension benefits not funded through a formal trust. Statement No. 68 excluded these benefits, which have remained subject to Statement No. 27. The new Statement No. 73 is effective for periods beginning after June 15, 2015.

We expect the new statements to be available later this month.

Cheiron will be providing more information on the new statements 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.