Question

Which of the following disclosures of pension plan information would not normally be required by Statement of Financial Accounting Standards No. 132, "Employers' Disclosure about Pensions and Other Postretirement Benefits"?

a. the major components of pension expense
b. the amount paid from the pension fund to retirees during the period
c. the funded status of the plan and the amounts recognized in the financial statements
d. the rates used in measuring the benefit amounts

Answer 1

The disclosure that would not normally be required by Statement of Financial Accounting Standards No. 132 is the amount paid from the pension fund to retirees during the period. Option b.

Step-by-step explanation:

In accordance with Statement of Financial Accounting Standards No. 132, "Employers' Disclosure about Pensions and Other Postretirement Benefits", the required disclosures normally do not include option b the amount paid from the pension fund to retirees during the period. Rather, this standard typically mandates disclosure of:

• The major components of pension expense.
• The funded status of the plan and the amounts recognized in the financial statements.
• The rates used in measuring the benefit amounts.

While the standard aims to provide information and penalize firms for underfunding their pension plans, it does not typically require reporting the actual payments to retirees within a given period. Employers are instead moving towards "defined contribution" plans, such as 401(k)s and 403(b)s, which allow for more portability and less inflation risk for retirees.