FAS change of measurement date

[Guest saeissler]

I am changing the measurement date from 12/31 to 9/30 for FAS87. The employer's fiscal year is 1/1/05 to 12/31/05. I left the service cost as a full year but I pro-rated the interest calculated to 9-30-05. The audtitor says that the net periodic pension cost has to be for the full 12 months although the gains/losses are calculated to 9-30-05. I can't do that because the numbers all tie in together. What is the correct way to make this change? Is there anything in writing?

[david rigby]

Are you the actuary? If so, "you" are not changing the measurement date. To see some discussion on this topic, read this:

http://benefitslink.com/boards/index.php?showtopic=20854

I agree that the NPPC should be 12 months, assuming it applies to a company financial statement that covers 12 months. It is unclear from your phrasing and dates exactly which 12 months are in question. Are you saying that you previously calculated the CY2005 NPPC at 12/31/04, and are now calculating the CY2006 NPPC at 9/30/05?

If not, please elaborate.

If so, are you using the same census data in both?

What asset value are you using?

[Guest saeissler]

Thanks - that link was very helpful. Yes, I am the actuary. The fiscal year is 1-1-05 to 12-31-05. The measurement date has always been 12/31, but the company was thinking of switching to a measurement date of 9/30, (the date of census data and asset data) just to know the FAS numbers sooner. The acountant agreed. But from your link, it appears that I don't worry about the short year, because, what is worse, I would have to go back and recalculate all years, using new 12 month periods, ending with 9-30-05. I had just convinced myself that perhaps the measurement date is just what it says - a measurement date only - and that one would still do the calculations on the fiscal year basis - 1/1 to 12/31, but just plug in the service cost and PBO numbers that were calculated as of 9/30/05. Your link eliminates that neat interpretation!