EZGSA Blog | Useful Articles | Upcoming Events

EZGSA Blog

GSA Schedule professionals keeping you current with government contracting news

Home
Categories
Tags
Bloggers
Search
Archives
Login

Username Password
Remember me

CAS Pension Harmonization

Posted by Darrell Oyer on Friday, 20 January 2012 in Federal Contracting

CAS 412 and 413 have been revised to include the recognition of a “Minimum actuarial liability” and “minimum normal cost,” which are measured on a basis consistent with the liability measurement used to determine the Pension Protection Act (PPA) minimum required contribution. The rule also accelerates recognition of actuarial gains and losses and makes other changes to harmonize the CAS standards with the minimum required contributions established by the PPA amendments to the Employee Retirement Income Security Act.

The Board reiterated its position that Congress did not intend it to adopt ERISA's minimum required contribution for measuring, assigning and allocating pension costs to CAS-covered contracts. The Board noted that historically, it is common knowledge that financial accounting policies and procedures have inherently different goals from government contract cost accounting that preclude their use for the appropriate measurement, assignment and allocation of pension costs for CAS. Adoption of either financial accounting or tax accounting rules for CAS 412 and 413 would have resulted in inequities and unfairness to both contracting parties. (Editorial note: The Board did not elaborate significantly on the harm to contractors.)

The final rule accelerates the assignment of actuarial gains and losses to accounting periods by decreasing the amortization period from a fifteen-year period to a ten-year period. It also specifies that the ten-year amortization of gains and losses begins with the first cost accounting period. The rule provides a transition period consisting of five cost accounting periods, the Pension Harmonization Rule Transition Period, that will phase in recognition of any adjustment of the actuarial accrued liability and normal cost.

Courtesy of:
Darrell Oyer & Company
Government Contract Specialists
PO Box 11484
Milwaukee, WI 53211
This e-mail address is being protected from spambots. You need JavaScript enabled to view it