Defined benefit pension plans provide a promise to pay to participants specified benefits that are determinable and are based on such factors as age, years of service, and compensation.
Defined benefit pension plans may be single employer or multiemployer plans. In addition, these plans may be funded through accumulated contributions and investment income (self-funded plans), insurance contracts (insured plans), or a combination of both (split-funded plans). Contributions may be required from both employers and participants (contributory plans) or from employers only (noncontributory plans).
Traditional defined benefit pension plans provide benefits that are defined in terms of a percentage of final average compensation or career average compensation, or as a flat dollar benefit per year of service.
Financial Accounting Standards Board (FASB) Accounting Standards Codification™ (ASC) 960, Plan Accounting—Defined Benefit Pension Plans, establishes generally accepted accounting principles for defined benefit pension plans and prescribes the general form and content of financial statements of those plans.
General information
Accounting and Reporting by Defined Benefit Pension Plans
General information about the accounting and reporting requirements for defined benefit pension plans.
Tools and resources
Documentation of Use of An Actuarial Report in an Audit of a Defined Benefit Pension Plan’s Financial Statements
The tool is intended to assist members in documenting their procedures and findings related to their review of actuarial reports prepared for plan management that are used as audit evidence in their defined benefit pension plan audits.
Actuarial method and assumptions used in measuring accumulated plan benefits in defined benefit pension plans
This Employee Benefit Plan Audit Quality Center (EBPAQC) primer was developed to provide Center a general understanding of the actuarial method and assumptions used in measuring the actuarial present value of accumulated plan benefits under FASB ASC 960, Employee Benefit Plan Accounting—Defined Benefit Pension Plans.
EBPAQC Topix Primer, Cash Balance Plans
This document provides information about the nature and characteristics of cash balance plans, references to the relevant accounting and auditing professional literature, and information about other helpful resources
Article
Plan Design in the Balance, Weighing the pros and cons of cash balance plans, Journal of Accountancy Article