GASB 45 - OPEB Actuarial Valuation Frequency
Posted 2-18-2011 | By David Mol | Download Article
It's been a few years since GASB 45 - Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions - has been adopted, but questions about the standard still remain.
One question we are asked often is: Do we need to have an actuarial study done this year?
GASB 45 states an "actuarial valuation is required at least biennially for OPEB plans with a total membership of 200 or more, or at least triennially for plans with a total membership of fewer than 200." In other words, for many governmental entities, an actuarial valuation is required every three years.
The key piece of information needed from the actuarial valuation is the employer's annual required contribution or "ARC". If your plan has fewer than 200 members and you desire to have a valuation performed every three years, then the valuation should include a calculation of the ARC for the three- year period. If the valuation does not include a calculation of the ARC for a three-year period, talk with your actuary about obtaining this calculation. For future valuations, make sure your communication with the actuary includes a discussion of the frequency and the need for a calculation of the ARC.
Two final notes: 1) GASB 45 requires the valuation be performed as of a date not more than 24 months before the beginning of the first year of the period for which the valuation provides the ARC; and 2) GASB 45 states "a new valuation should be performed if, since the previous valuation, significant changes have occurred that affect the results of the valuation, including significant changes in benefit provisions, the size or composition of the population covered by the plan, or other factors that impact long-term assumptions." Materiality levels should be considered when determining whether significant changes have occurred. Your actuary or auditor can help determine if a certain change is considered significant.
For more information, please contact David Mol, CPA, at dmol@hlbtr.com or Peggy Moeller, CPA, at pmoeller@hlbtr.com.