ASC

ASC 960-10

Overall

960 Plan Accounting—Defined Benefit Pension Plans

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In brief

IntermediateIndustry-specificCompensation and benefitsFinancial statement presentationPresentation

ASC 960-10 is the Overall subtopic of the defined benefit pension plan accounting Topic, setting the scope of and providing an overview of financial reporting by the plan itself (not the sponsoring employer, which follows Topic 715). Defined benefit plans promise participants determinable benefits based on factors such as age, years of service, and compensation, and because the plan's net assets are the means of paying those benefits, net asset information is necessary to assess the plan's ability to pay benefits when due. The Topic applies to all ongoing plans (funded or unfunded, ERISA and non-ERISA, U.S. and comparable foreign plans reporting under U.S. GAAP) but does not itself require any plan to prepare or distribute financial statements.

Key points (7)
  • Topic 960 covers plan-level accounting for defined benefit pension plans; defined contribution plans fall under Topic 962, health and welfare plans under Topic 965, and employer-side accounting under Topic 715 (960-10-05-1).
  • The Topic is organized into Subtopics for Overall, Accumulated Plan Benefits, Net Assets Available for Plan Benefits, Terminating Plans, Presentation of Financial Statements, Receivables, Investments—Other, and Property, Plant, and Equipment (960-10-05-2).
  • Defined benefit plans promise specified, determinable benefits based on factors such as age, years of service, and compensation, and net asset information is necessary to assess the plan's ability to pay benefits when due (960-10-05-4).
  • This Topic does not require the preparation or distribution of any plan's financial statements (960-10-05-5); ERISA reporting requirements are largely outside the Codification but must still be considered by preparers (960-10-05-6 through 05-7).
  • Scope covers all ongoing plans, funded or unfunded, for employees of one or more employers or members of a trade or employee association, whether or not subject to ERISA, and however financed—trust funds, insurance contracts, both, or no intermediary funding agency (960-10-15-2(a)).
  • Non-U.S. plans similar to U.S. plans are within scope if their financial statements are intended to conform with U.S. GAAP (960-10-15-2(b)); government-sponsored social security plans are excluded (960-10-15-3(a)).
  • Terms such as actuarial asset value, benefit security, general account, nonvested benefit information, and retired life fund are widely used in practice but are not defined in the standards (960-10-05-8).

For students. The most common confusion is mixing up plan accounting (Topic 960, where the plan is the reporting entity) with employer accounting (Topic 715, the sponsor's books); a second trap is assuming GAAP requires plan financial statements, when 960-10-05-5 expressly does not—that requirement comes from ERISA.

defined benefit pension plannet assets available for benefitsaccumulated plan benefitserisa reportingplan-level financial statementsongoing plantrust or insurance contract fundingscope exclusions

Machine-generated study aid for ASC 960-10. Check the source paragraphs below.

960-10-00Status

Source downloaded: .Record version 5afbf7902b15. Effective date must be checked in the source.

960-10-00-1
The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
BenefitsAmendedAccounting Standards Update No. 2016-1912/14/2016
Benefits (1st def.)SupersededAccounting Standards Update No. 2014-0603/14/2014
Benefits (3rd def.)AddedAccounting Standards Update No. 2014-0603/14/2014
Defined Benefit PlanAddedAccounting Standards Update No. 2014-0603/14/2014
Defined Benefit Pension Plan (1st def.)SupersededAccounting Standards Update No. 2014-0603/14/2014
Pension Benefits (1st def.)SupersededAccounting Standards Update No. 2014-0603/14/2014
Pension Benefits (2nd def.)AddedAccounting Standards Update No. 2014-0603/14/2014
Service (1st def.)SupersededAccounting Standards Update No. 2014-0603/14/2014
Service (2nd def.)AddedAccounting Standards Update No. 2014-0603/14/2014
960-10-05-1AmendedAccounting Standards Update No. 2014-0603/14/2014
960-10-05-3AmendedAccounting Standards Update No. 2014-0603/14/2014
960-10-05-4AmendedAccounting Standards Update No. 2014-0603/14/2014
960-10-15-2AmendedAccounting Standards Update No. 2014-0603/14/2014

960-10-05Overview and Background

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960-10-05-1
The Codification contains several Topics for benefit plan accounting due to the differing accounting treatments for various forms of employee benefit plans. The Topics include:
  1. a
    Plan Accounting—Defined Benefit Pension Plans, (this Topic)
  2. b
    Plan Accounting—Defined Contribution Pension Plans, Topic 962
  3. c
    Plan Accounting—Health and Welfare Benefit Plans, Topic 965.
Additionally, Topic 715 addresses financial accounting and reporting for an employer that offers pension, other postretirement, and certain special or contractual benefits to its employees.
960-10-05-2
The Plan Accounting—Defined Benefit Pension Plans Topic includes the following Subtopics:
  1. a
    Overall
  2. b
    Accumulated Plan Benefits
  3. c
    Net Assets Available for Plan Benefits
  4. d
    Terminating Plans
  5. e
    Presentation of Financial Statements
  6. f
    Receivables
  7. g
    Investments—Other
  8. h
    Property, Plant, and Equipment.
960-10-05-3
The Overall Subtopic provides scope-related guidance for this Topic and an overview of accounting and reporting for defined benefit pension plans.
960-10-05-4
Defined benefit pension plans provide a promise to pay to participants specified benefits that are determinable and are based on such factors as age, years of service, and compensation. A plan's net assets are the existing means by which it may provide benefits, therefore, net asset information is necessary in assessing a plan's ability to pay benefits when due.
960-10-05-5
This Topic does not require the preparation or distribution of any plan's financial statements.

The Employee Retirement Income Security Act of 1974

960-10-05-6
Defined benefit pension plans are generally subject to certain of the reporting and other requirements of the Employee Retirement Income Security Act of 1974. In addition to establishing certain minimum standards for participation, vesting, and funding for employee benefit plans of private entities, the Act also requires annual reporting of certain information to particular governmental agencies and summarized information to plan participants. For many plans, the reporting requirements include financial statements prepared in conformity with generally accepted accounting principles (GAAP).
960-10-05-7
The reporting requirements of the Act, except for certain particular references, are not included in the Codification, but they should nonetheless be considered by those responsible for the preparation of defined benefit plan financial statements.
960-10-05-8
The following terms are widely used when addressing benefit plan accounting and reporting, yet are not included in the text of the standards:
  1. a
    Actuarial asset value
  2. b
    Benefit security
  3. c
    General account
  4. d
    Nonvested benefit information
  5. e
    Retired life fund.

960-10-15Scope and Scope Exceptions

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Overall Guidance

960-10-15-1
The Subtopics within the Plan Accounting—Defined Benefit Pension Plans Topic only provide incremental guidance for the entities defined in this Scope Section, or as further defined in the Scope Sections of the individual Plan Accounting—Defined Benefit Pension Plans Subtopics.

Entities

960-10-15-2
The guidance in this Topic applies to the following entities:
  1. a
    All ongoing plans, funded or unfunded, that provide pension benefits for the employees of one or more employers or for the members of a trade or other employee association, including the following:
    1. 1
      Subparagraph not used.
    2. 2
      Plans that are subject to the provisions of the Employee Retirement Income Security Act
    3. 3
      Plans that are not subject to the provisions of the Employee Retirement Income Security Act
    4. 4
      Plans that have no intermediary funding agency or plans that may be financed through any of the following:
      1. i
        One or more trust funds
      2. ii
        One or more contracts with insurance entities
      3. iii
        A combination thereof.
  2. b
    Plans maintained outside the United States that are similar to plans maintained in the United States if financial statements of such plans are intended to conform with U.S. generally accepted accounting principles (GAAP).
960-10-15-3
The guidance in this Topic does not apply to the following entities:
  1. a
    Government-sponsored social security plans.

Related subtopics