NORWALK, Conn. — Corporate financial executives object to the FASB's proposal to require more detailed disclosure of the investment allocation and valuation of pension assets, comment letters show.
“FASB (should) not put in place a regime that will have little or no relevance in the future,” wrote William F. Quinn, chairman of the Committee on Investment of Employee Benefit Assets, in a comment letter on the proposal to the Financial Accounting Standards Board, Norwalk, Conn.
The proposal “will not lead to a meaningful increase in transparency and may reduce comparability,” said Mr. Quinn, who is also chairman of American Beacon Advisors Inc., which oversees the $9.1 billion pension fund of American Airlines Inc., both units of AMR Corp., Fort Worth, Texas. (American Beacon's sale to Lighthouse Holdings is expected to close in summer.)
Mr. Quinn was referring to one aspect, on disclosure of debt details, although his letter was generally critical of the proposal.
The proposal would amend Statement 132R — Employers' Disclosures about Pensions and Other Postretirement Benefits. If adopted, it would take effect for corporate fiscal years ending after Dec. 15, 2008, or in time for the 10-K statements most corporations will issue next spring.
“We have nearly 20 benefit plans worldwide that have literally thousands of investments in various private and public companies through over 100 investment managers,” wrote Arnold C. Hanish, executive director-finance and chief accounting officer at Eli Lilly, expressing concern about the complexity of accumulating the asset data in a tight reporting timeframe.
The disclosure detailing “the benefit plan assets is not decision-useful data and ... the overall potential benefits to the readers do not outweigh the potential costs and time of providing this disclosure,” he wrote.
Eli Lilly, based in Indianapolis, has $7.3 billion in worldwide defined benefit assets, according to its 10-K report.