The incidence of federal excise tax or any cash reversions is not dealt with herein. The search disclosed 71 companies reporting settlement transactions and 21 companies reporting curtailment related transactions. Of 21 curtailments, we identified 10 arising from disposal of lines of business. An additional 19 companies offered special termination benefits, which are also accounted for under SFAS 88. More companies engaged in settlements than in curtailments.
Curtailments typically modify benefits available to employees under defined benefit plans.
A settlement typically locks in a benefit, and companies may find settlement a less costly action in terms of employee reactions than a curtailment. It simultaneously offers the employer substantial accounting flexibilities. Special termination benefits are also accounted for under SFAS 88, and involve benefits offered to employees in connection with leaving the company. Previously deferred gains relate to terminations occurring prior to adoption of SFAS 87 that are now being accounted for under SFAS 88. Comparative balance sheet information for all sample companies as to plan assets and PBO was not available, but the data available indicated that sample companies had an excess of plan assets over their PBO and also had accrued liabilities related to their plans.