The Board believes that the content of plan financial statements should focus on the needs of participants because pension plans exist primarily for their benefit. Because employees render service long before they receive the benefits to which they are entitled as a result of that service, they are concerned with whether the plan will be able to pay their future benefits. Therefore, the Board concluded that the primary objective of plan financial statements should be to provide financial information that is useful in assessing the plan's present and future ability to pay benefits when due. However, plan financial statements do not provide all the information necessary for that assessment. Also, financial statements for several plan years can provide information more useful in assessing the plan's future ability to pay benefits than can the financial statements for a single plan year.
Insurance companies offer plans a wide variety of contracts.
Because of their complexity, several difficult issues arise in recognizing and measuring the elements of such contracts that constitute plan assets. The Board decided that sufficient information was not available at this time to enable it to reach definitive conclusions about certain conceptual and implementation issues. That approach may result in such contracts being presented at other than fair value. To be useful in assessing a plan's present and future ability to pay benefits when due, plan financial statements must also present information about the benefits to be paid. Because the Board did not deem it essential at this time to resolve the issue of the accounting nature of the benefit information, this Statement does not prescribe its location in the financial statements.