FASB's proposal on pension and other post-retirement employee benefit plans is unlikely to alter credit ratings of companies in the vast majority of cases, according to a study released today by Moody's Investors Service. The proposal would result in a 14% median reduction in equity for pension plans, according to the study, which examined balance sheets of 50 large U.S. companies.
The Financial Accounting Standards Board proposes requiring companies to record the funded status of their retirement plans on their balance sheets, which would better reflect the economics of retirement plans and eliminate the artificial smoothing of pension assets and liabilities that current rules permit, the Moody's study notes.
