What Is a Statement of Changes in Net Assets Available for Pension Benefits?

A Statement of Changes In Net Assets Available for Pension Benefits is a report on the current financial status of a pension fund, provided to participants in the plan. It gives plan members a regular accounting of all transactions that affect the assets of the pension.

Understanding the Statement of Changes

While the formats and details of pension fund statements vary, the Statement of Changes In Net Assets Available for Pension Benefits must always list all additions and deductions from the available asset list for the pension fund.

The category of additions to the available benefits will include investment income and employer contributions to the plan. The category of deductions will include administrative expenses and tax payments as well as pension benefits and death benefits paid out.

Typically, the largest adjustments will involve changes in the fair value of investments and pension benefits.

Importance of the Statement to Participants

The Statement of Changes in Net Assets for any given period can show significant changes in the value of the assets in the fund. This may be of interest to any fund participant but it is most important to those who have a defined contribution plan.

Participants in a defined contribution plan contribute a set amount of money to a pension fund, and the performance of the fund over time, until the employee retires or otherwise liquidates the fund, determines the payout amount that the participant will receive.

Participants in a defined benefit plan, on the other hand, have a pre-defined payout amount that will not change with the ups and downs of the plan's assets. Companies providing defined benefit plans assume the risk of the investments.

For many companies, pension funds represent large, long-term liabilities and require complicated accrual accounting. Several common factors play into the complications of pension fund accounting, all of which will impact the Statement of Changes in Net Assets. These factors include the need to make estimates of the size of payments to future retirees and the value of investment returns from year to year.