Pension settlement requires a named plan, population, date, and evidence owner. A settlement is an irrevocable action that relieves primary responsibility for qualifying pension benefits and meets the recognition threshold. Document the obligation relieved, assets transferred, participants, transaction price, and remeasurement.
Apply it
An accepted annuity purchase may settle a specified obligation. An unsigned quote or routine $1.1 million benefit payment does not prove that primary responsibility transferred.
Common mistake
Do not assume that any large benefit payment is a pension settlement. A settlement is an irrevocable action that relieves the employer or plan of primary responsibility and meets the applicable recognition threshold. That error would remove obligations for a payment that did not relieve primary responsibility.
Keep the boundary clear
Accounting applies a supported settlement conclusion. It does not decide insurance-contract enforceability, legal release, or whether risk transfer is irrevocable.
Authority
Read ASC 715-30-35-79 for the pension settlement definition and recognition model.
Put the concept to work
Apply this concept
- Explain and apply pension settlement within a reconciled employer benefit-plan workpaper using supplied authoritative and actuarial facts.
Learning resources
Choose a lesson, try an application, or inspect the sources behind this concept.
Build on these ideas
- Projected benefit obligation — Apply
To apply this concept: Required. This prior concept supplies the terms, date, or measurement needed here.