It applies both to plans in the private sector and to plans of state and local governmental units. It does not require the preparation, distribution, or attestation of financial statements for any plan. The primary objective of a plan's financial statements is to provide financial information that is useful in assessing the plan's present and future ability to pay benefits when due. Either or both of those categories of information may be presented on the face of one or more financial statements or in accompanying notes.
Information regarding net assets is to be prepared on the accrual basis of accounting.
The primary information regarding participants' accumulated plan benefits reported in plan financial statements will be their actuarial present value. This Statement defines participants' accumulated plan benefits as those future benefit payments that are attributable under the plan's provisions to employees' service rendered to the benefit information date. Their measurement is primarily based on employees' history of pay and service and other appropriate factors as of that date. Future salary changes are not considered. Future years of service are considered only in determining employees' expected eligibility for particular types of benefits, for example, early retirement, death, and disability benefits.