ASC 960
Active
ASC 960 – Plan Accounting–Defined Benefit Pension Plans
Addresses plan-level defined benefit pension plan reporting including statements of net assets available for benefits and actuarial present value disclosures.
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Conceptual Framework Linkage – Plan-Level vs Employer-Level Reporting
A genuinely separate reporting entity, with its own distinct question
A defined benefit pension PLAN is typically a SEPARATE legal trust, with its OWN financial statements – distinct from the SPONSORING EMPLOYER's own accounting for its pension obligation under ASC 715 (see the companion poster). Where ASC 715 asks "what pension LIABILITY should the EMPLOYER recognise on ITS balance sheet," ASC 960 asks a DIFFERENT question: "what are the PLAN's OWN net assets, and how do they compare to the actuarial value of benefits EARNED to date?" – a genuinely separate reporting purpose, serving PLAN participants and regulators (e.g. for Form 5500 filings) rather than the employer's own shareholders.
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Scope
The financial statements of the pension plan itself
ASC 960 applies to the SEPARATE financial statements prepared for DEFINED BENEFIT pension plans themselves (typically prepared by the plan's trustee/administrator), not to the sponsoring employer's own financial statements.
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Statement of Net Assets Available for Benefits
A balance-sheet-like statement, with investments at fair value
The plan's PRIMARY statement resembles a balance sheet – presenting the plan's ASSETS (predominantly INVESTMENTS, measured at FAIR VALUE, NOT amortised cost) LESS its LIABILITIES (e.g. accrued expenses, amounts due to brokers) – resulting in "NET ASSETS AVAILABLE FOR BENEFITS," the pool of resources available to pay promised pension benefits.
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Statement of Changes in Net Assets Available for Benefits
The plan's own "income statement" – contributions in, benefits out
This statement shows the ACTIVITY driving the change in net assets available for benefits during the period – EMPLOYER and (if applicable) EMPLOYEE contributions RECEIVED, INVESTMENT income/gains (dividends, interest, realised/unrealised appreciation), LESS benefits PAID to participants and administrative EXPENSES incurred by the plan.
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The Actuarial Present Value of Accumulated Plan Benefits
A distinctive actuarial disclosure, unique to plan-level reporting
ASC 960 uniquely requires disclosure of the ACTUARIAL PRESENT VALUE of ACCUMULATED PLAN BENEFITS – the actuarially discounted value of benefits EARNED by participants to date, generally measured using CURRENT salary levels (NOT projecting future salary increases) – presented either on the FACE of the financial statements or in the notes, alongside the net assets available for benefits, giving readers a direct comparison between the plan's ASSETS and its accumulated benefit OBLIGATION.
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Contrast With ASC 715's PBO – Current vs Projected Salary
A genuinely different measurement basis than the employer's own PBO
ASC 960's "actuarial present value of accumulated plan benefits" is measured using CURRENT salary levels – conceptually closer to the ACCUMULATED benefit obligation (ABO) concept used at the EMPLOYER level under ASC 715, rather than the EMPLOYER's own PROJECTED benefit obligation (PBO), which INCORPORATES expected future salary increases. This is a genuinely DIFFERENT measurement basis from what the SPONSORING employer reports on ITS OWN balance sheet under ASC 715 – readers comparing the plan's OWN financial statements to the employer's pension footnote disclosures should be aware these are NOT measuring the identical obligation.
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Worked Example – the Net Assets Available for Benefits Statement
Investments at fair value, less plan liabilities
Example: A pension plan's year-end position
A pension plan's investment portfolio has a fair value of $85,000,000, with $500,000 of accrued administrative expenses and amounts due to brokers.
Net assets available for benefits = $85,000,000 − $500,000 = $84,500,000 – presented as the plan's own "balance sheet" total, with investments measured at FAIR VALUE (not cost), consistent with the fair-value-forward orientation shared across most of this Topic area.
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Worked Example – the Actuarial Present Value Disclosure
Comparing plan assets to the accumulated benefit obligation
Example: Assessing the plan's funded status
Continuing the prior example, the plan's actuary determines the actuarial present value of accumulated plan benefits (using current salary levels) to be $92,000,000.
The plan DISCLOSES net assets available for benefits of $84,500,000 ALONGSIDE the $92,000,000 actuarial present value of accumulated benefits – highlighting a $7,500,000 shortfall between plan ASSETS and the actuarial value of benefits EARNED to date, a DIRECT comparison unique to plan-level reporting.
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Disclosure Requirements
What ASC 960 requires
Net assets available for benefits, by major investment category at fair valueActuarial present value of accumulated plan benefits, and significant actuarial assumptions usedChanges in net assets available for benefits, including contributions, investment activity, and benefits paid
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Critical Judgments & Estimates
Where judgement matters most
SIGNIFICANT JUDGEMENTS
Classification and valuation techniques for less liquid plan investments
SIGNIFICANT ESTIMATES
Actuarial assumptions (discount rate, mortality) underlying the accumulated plan benefits calculation
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ASC 960 vs IAS 26 – Comparison
Comparison – ASC 960 vs IAS 26
FeatureUS GAAP (ASC 960)IFRS (IAS 26)
Investments at fair valueRequiredRequired – converged
Actuarial present value of promised/accumulated benefitsRequired disclosure, current salary basisRequired disclosure of actuarial present value of promised retirement benefits – broadly converged concept
IAS 26 (Accounting and Reporting by Retirement Benefit Plans) is a genuinely close, direct IFRS counterpart to ASC 960 – one of the more converged plan-level reporting Topics in the library.
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Statement Mapping
Where every ASC 960 event lands (plan-level statements)
EventStatement(s) affectedNotes
Investment fair value changeNet assets statementRecognised in the changes in net assets statement
Benefits paid to participantsBoth plan-level statementsReduces net assets available for benefits
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Related Topics
Cross-reference map
TopicConnection
ASC 715Governs the SPONSORING EMPLOYER's own separate pension accounting – a distinct question from this Topic's plan-level focus
ASC 820Supplies the fair value measurement framework for plan investments
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Quick-Reference Glossary
Net assets available for benefits
A pension plan's total assets, measured at fair value, less its liabilities – the plan-level analogue to a balance sheet total.
Actuarial present value of accumulated plan benefits
The discounted actuarial value of benefits earned by participants to date, measured using current salary levels, disclosed alongside net assets available for benefits.
Financial statement key
BS Balance sheet
IS Income statement
SE Statement of changes in equity
OCI Other comprehensive income
SCF Statement of cash flows