[Note: in late 1998 DOL announced the non-enforcement policy discussed below would not be adopted, and DOL may reject any 5500 not complying with SOP 92-6, beginning with Plan years after 1999. My recommendation: don't delay any longer, get started on the computations now.]
DOL Proposes Nonenforcement of SOP 92-6 Accounting Standard
Statement of Position 92-6 ("SOP 92-6") was issued by the American Institute of Certified Public Accountants (AICPA) to improve accounting standards for welfare benefit funds. Under the SOP, plans must measure the actuarial cost of providing welfare benefits to retirees, and must record that cost over the working lives of the participants. This is a significant change in accounting principles, and many multiemployer plans have sought to avoid the cost of calculating the postretirement benefit obligations by appealing directly to DOL.
In 1996 DOL made known its informal policy that, at least for 1996, multiemployer plans could ignore the SOP without fear of DOL rejecting their 5500's. However, since protection of pension plans was such a hot political issue in 1996, DOL's Chief Accountant Ian Dingwall told me, they were not going to publish any policy in an election year which appeared to relax standards. On 3/13/97, DOL issued a notice and request for comments (62 FR 11929) proposing nonenforcement of SOP 92-6 at least through plan year 1997. A copy of DOL's press release is below. Please note that it applies only to collectively bargained multiemployer plans.
Comment: Early objections to the SOP focused on the high cost of information that "no one needed". However, we have found that SOP calculations do not have to be so costly, because you do not need a full-blown "valuation" of the plan. We are already doing the calculations, using data that is readily available, for half the cost quoted by some actuaries. (And, we don't need 7 months after year end to complete the work.) We have found that the resulting postretirement obligations are larger than some would expect, but the information is meaningful, and should be considered by trustees in managing their plans. Even while proposing nonenforcement of the SOP, the Department of Labor said:
The Department nonetheless believes that administrators of such plans must determine...to what extent evaluation of post-retirement welfare benefit obligations may provide information necessary to the discharge of the plan fiduciaries' duties under ERISA."
We believe that DOL is setting a dangerous precedent in choosing which generally accepted accounting principles it will enforce. And, we believe, trustees and participants should have access the the information the SOP requires.
U.S. DEPARTMENT OF LABOR
Pension and Welfare Benefits Administration
PWBA Press Release: Labor Department Seeks Comment On Proposed Nonenforcement
Policy For Annual Reporting By Multiemployer Welfare Plans [03/13/97]
For more information call: (202) 219-8921
The U.S. Department of Labor is seeking public comment on whether to adopt a proposed nonenforcement policy for Form 5500 annual reports filed by multiemployer plans providing post-retirement health and other welfare benefits.
Under the proposed nonenforcement policy, the department would not reject as deficient the Form 5500 reports of a multiemployer collectively bargained welfare plan under certain conditions. Reports would not be rejected if the opinion of the plan's accountant, accompanying the Form 5500, is either "adverse" or "qualified" solely because the plan's financial statements do not include the plan's estimated cost for providing future retiree health and other post-retirement welfare benefits. The American Institute of Certified Public Accountants' (AICPA) Statement of Position 92-6 (SOP 92-6) requires that the financial statements of the plan include this projected cost.
Multiemployer plans formally requested the nonenforcement policy citing a substantial increase in administrative and recordkeeping burdens that would be required to calculate the cost of post-retirement welfare benefits in accordance with SOP 92-6 and argued that the SOP 92-6 estimate does not provide useful information to plan trustees and participants.
The notice, published in today's Federal Register, seeks public comment on the implications, costs and benefits of allowing multiemployer plans to file Form 5500 annual reports under this proposed policy. Multiemployer plans may rely on the proposed policy for Form 5500 annual reports required to be filed through plan year 1997. The department expects to have sufficient information and data, based on the public comments received, to decide in advance of Jan. 1, 1998, whether the proposed nonenforcement policy should be adopted on a permanent basis.
Public comments or requests for a hearing should be submitted in writing to the Office of Regulations and Interpretations, Pension and Welfare Benefits Administration, Room N-5669, 200 Constitution Ave., N. W., Washington, D.C. 2021 0, Attention: Reporting Enforcement Policy.
[http://www.dol.gov/dol/opa/public/media/press/pwba/pwb97089.htm]
Additional information:
| Home | Feedback | More Sites |
cpaSPAN ©2005 J.Cheek