Which statement best reflects GASB requirements for pension reporting?

• A. Pension liabilities are not recorded
• B. Recognize net pension liability and accrue annual pension costs, and ensure timely contribution payments with ongoing actuarial and reporting requirements
• C. Only CalSTRS contributions are required
• D. Contributions are recognized only when cash is paid

Answer: (B)

GASB requires governments to reflect the financial impact of defined-benefit pension plans in their financial statements. This means recognizing the net pension liability (the difference between future benefits and plan assets) on the balance sheet and accruing the annual pension cost as it is earned, rather than waiting to pay cash. The reporting also includes ongoing actuarial valuations and disclosures, with contributions expected to be timely and aligned with the actuarially determined funding requirements. This approach captures both the obligation the entity has and the annual cost of that obligation, including changes from actuarial assumptions and plan assets.

Options that suggest not recording any liability, limiting obligations to a single plan (like CalSTRS), or recognizing contributions only when cash is paid do not fit GASB’s accrual-based approach to pension reporting.