USA: General Motors opposes proposed pension plan accounting rule change - report
General Motors, struggling with its under-funded US pension plan (see separate report), said on Friday, according to Reuters, that it opposed an accounting rule currently being developed to improve disclosure on corporate pension plans.
The Financial Accounting Standards Board, which sets accounting rules in the United States, agreed earlier last week that companies must immediately disclose to investors if they plan to change the amount of money they put into their pension plans, a spokeswoman told the news agency.
Companies must also report pension costs on a quarterly basis, instead of just in the annual report while pension costs presented in the income statement must also be presented on a quarterly basis, Reuters added.
"General Motors feels that the current pension disclosure requirements are adequate," spokeswoman Toni Simonetti told the news agency. "The proposed new rule assumes you have one defined-benefit plan. If you're a multinational and you have several plans, it's virtually impossible to comply with the (new) rule," she reportedly added.
Reuters noted that the tentative decisions by FASB are part of a broader rule the board is developing to improve the information available to investors on the performance of pension plans and their impact on companies.
The report added that pension accounting rules have been criticised because they allow companies to smooth out gains and losses stemming from their pension plans over time, allowing some companies to report pension profits on their books even while their pension portfolios suffered losses. FASB has decided against overhauling pension accounting rules and is focusing on improving disclosure instead, Reuters added.
The news agency said corporate pension plans have drawn attention recently as falling stock prices and declining interest rates have hurt portfolio returns at many major companies.
According to a study released earlier this month by consulting firm FTI Consulting, companies in the Standard & Poor's 500 stock index will be forced to pour more than $US35 billion into their pension plans over the next 16 months, Reuters noted.