Tuesday, September 4, 2012

Pension Shortfall at Commonwealth CU?

Credit Union Journal (paid subscription) is reporting that Kentucky's Commonwealth Credit Union may face a pension funding shortfall of approximately $60 million, which could put a serious dent in the net worth position of the credit union.

Commonwealth CU participates in the Kentucky Employees Retirement System (KERS), which is severely under-funded. Starting in fiscal year 2014, new Governmental Accounting Standards Board rules will require KERS to split out and pass down to all program participants their share of the under-funding.

Commonwealth CU did not respond to request for comments from Credit Union Journal.
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1 comment:

  1. AnonymousSeptember 12, 2012 at 10:48 AM

    Kieth, can you tell us:

    Would the defecit be realized against the credit union Call Report total capital dollars and ratio, or carried only as a valuation 'memo item' under capital but off balance sheet on the Call?

    Seems the KERS is not a Defined Benefit plan, passing down losses, so defined contribution? Is the credit union also permitted to pass down the losses to employees?

    How do bank Call Reports treat this? Seems there would be a lot of this out there at both banks and credit unions, and some/alot of it truly impaired if it is not recovering by now. Does GAAP accounting begin to require P&L hits, or has that already been happening?

    Thank you.

    ReplyDelete

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