Brief Summary of New OPEB Accounting Standards: GASB 74 and 75

07-27-2015 |

Brief summaries of new OPEB accounting standards, GASB Statements 74 and 75, for postretirement benefits provided by governmental agencies

Brief summaries of the newly approved GASB Statements 74 and 75, addressing accounting for governmental agency OPEB benefits have been published by Bartel Associates.

The Governmental Accounting Standards Board (GASB) approved new accounting standards for OPEB plans on June 2, 2015.

The new OPEB accounting standards are similar to GASB 67 and 68, which govern accounting for pension benefits:

  • Unfunded OPEB liabilities will be recognized on the face of an agency's financial statements
  • A 20-year Municipal Bond rate is used to discount unfunded benefit payments and the long-term rate of return on plan investments is used to discount benefits projected to be paid by plan assets --- this will increase reported liabilities for agencies not pre-funding OPEB benefits
  • Use of the Entry Age actuarial cost method is required
  • Extensive note disclosures and required supplementary information must be presented
  • These are accounting standards and do not require that OPEB benefits be funded
GASB 75 – Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions addresses accounting and financial reporting by government employers, currently covered by GASB Statement 45.

GASB 74 – Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans covers financial reporting by plans that administer OPEB benefits on behalf of governments, currently under GASB Statement 43.

The full statments can be downloaded from the GASB website.


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