On July 20, the Financial Accounting Standards Board (FASB) issued a Proposed Accounting Standards Update that would require employers contributing to multiemployer (union) pension plans to disclose information about the liability that would be incurred if the employer withdraws from the plan. This disclosure would be required even if the possibility of withdrawal is remote if that liability would severely impact the employer.
Should this proposal be adopted, it would be necessary for companies that contribute to multiemployer plans to obtain the potential withdrawal liability information from the trustees of the plan. Section 101(l) of ERISA requires that multiemployer plans furnish any contributing employer who has made a written request, the estimated amount of the withdrawal liability, along with an explanation of how that amount was determined. This request for a calculation of the withdrawal liability can be made annually.
Should the FASB proposal be adopted, it would mean that employers contributing to multiemployer plans will have to make this request annually unless the potential liabilities are not significant. In all events, employers should consider obtaining this information in order to better understand the potential exposure that may have to be faced some day.