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Pension Reporting

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Pension Reporting and Segment Elimination Requirements
Deborah Hunter, Stephanie Murray, James Newsome, Sharon Stubbs, and Star Troutman
ACC 541
January 14, 2013
Shauki Smith

MEMORANDUM
TO: CEO
FROM: Team A
DATE: January 14, 2013
SUBJECT: Pension Reporting and Segment Elimination Requirements
CC: Shauki Smith This memo serves to provide an explanation of required reporting for define contribution, defined benefit, and other postretirement plans. In addition to pension reporting requirements, an explanation of the requirements for eliminating segments is also provided.
Defined Contribution Plan
In a defined contribution plan, companies will define how much they plan to contribute each period to the employee’s retirement benefits. The company defines the period. The company will contribute the amount to a funding agency such as a pension fund. The company is not liable for the amount of benefits the employee receives upon retirement. Therefore, the company must only contribute the amount that was set forth each period. Defined benefit plans, on the other hand, are more complex. Instead of contributing each period to the employees retirement account, the company agrees to provide a certain benefit amount each period upon retirement. Therefore, the company must ensure that the funding for such plans are adequate to cover the employee’s retirement benefit plan.
Non-GAAP Funding Methods
A company that offers defined benefit plans to their employees may either choose to fund the benefit plan or pay the benefits as they come due, which is referred to as pay-as-you-go. In an unfounded defined benefit plan, the company does not set any funds aside to meet the future obligations; rather, the company will pay the retired employee when the benefit is due. Another method for funding defined benefit plans is terminal funding. This method is similar…...

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