Pension and OPEB Reporting: Key Steps and Best Practices

LSL Webinar “Back to Basics | Pension & OPEB for Beginners,” presented by Krystal Cabrera, CPA and Riley Greenlee, CPA outlined the fundamentals of pension and Other Post-Employment Benefits (OPEB) for beginners.

In case you missed it – here, we walk you through the necessary steps to determine which plans need to be reported, outline the reporting and measurement periods, and provide examples of accounting procedures for various types of plans. We will also touch on the specifics of systems like CalPERS, SBCERA, OCERS, and OPEB.

Whether you’re a beginner or just need a quick reminder, feel free to bookmark this post, save the link, or print out the steps for easy access later.

Determining the Plans to Report

The first step in pension and OPEB reporting is to identify which plans require reporting. This involves:

• Reviewing all pension and OPEB plans associated with your organization.
• Determining the reporting and measurement periods for each plan.
• Obtaining previous year calculations for previous balances and allocations which will be needed for your current year calculations.

Reporting and Measurement Periods

Accurate reporting requires a clear understanding of the reporting and measurement periods:

• Reporting Period: The time frame for which the financial information is being reported.
• Measurement Period: The date the Total Pension Liability, Fiduciary Net Position, and Net Pension Liability are determined.

For example, if your fiscal year ends on June 30, the measurement period may be no earlier than 12 months leading up to that date.

Systems Specifics: CalPERS, SBCERA, OCERS, and OPEB

Each system has unique reports available to help agencies report their Pension and OPEB liabilities: These can also vary based on the type of plan (cost-sharing vs. agent-multiple employer).

• You will need to obtain the plan actuarial reports from your retirement system and the schedule of employer allocations if using a cost-sharing CalPERs plan.
• OPEB plans will require a separate actuarial report to be obtained.

Plan Measurement periods will also vary based on the retirement system.

For entities with a June 30^th year-end, be sure to start early and obtain any reports and documentation now to prevent any delays for your 2023-24 audits.

Accounting Procedures for Different Plans

The presentation also provides examples of preparing the calculations and journal entries for:

• Agent-Multiple Pension Plans: These are plans where each employer has a separate account and must report its share of the collective net pension liability.
  • Under these plans, the ending pension liabilities, deferred inflows, and outflows will be calculated for you. In order to prepare the journal entries, you’ll need:
    •  the prior year ending balances and allocations,
    • the current year pension contributions subsequent to the measurement date (made after the measurement date and within your agency’s fiscal year)
    • the allocations for the funds and functional expenses for the pension costs.
• Cost Sharing Plans: In these plans, multiple employers share the costs and risks of the pension plan. Each employer must report its proportionate share of the collective net pension liability.
  • These plans may require an additional calculation to determine your agency’s proportion of the liabilities. (particularly for CalPERS cost-sharing plans). In addition to the items above, you’ll need:
    • The prior year’s calculation template
    • A calculation template to determine the current deferred inflows, outflows, and liabilities for your agency– these are available through CalPERS or other agencies.
    • Once you have calculated the balances using the templates, you can prepare the necessary journal entries.
• As OPEB plans are calculated by an independent actuary, specifically for your entity, the reports provide the ending balances for the reporting period. The specific items needed to prepare your year-end journal entries are:
  • • Actuarial report
    • Allocation for the funds and functional expenses
    • Contributions subsequent to the measurement date, if not provided to your actuary and included within the report.

Once you have obtained the necessary documents, and prepared your journal entries, you are ready for review and incorporating into your agency’s GL for audit!

For detailed guidance on audit preparation for pension and OPEB reporting, be sure to check out our companion blog Audit Preparation: Essential Steps for Pension and OPEB Reporting.