IN BRIEF : Advance Pension Funding Asked

Financial Accounting Standards Board today announced a controversial proposal to change the way companies account for pension benefits, a plan which could significantly affect company profits.

The proposed new rules, scheduled to take effect in 1992, would require U.S. companies to deduct promised post-retirement medical and insurance benefits as they are earned, or while an employee is still working for the company.

It would eliminate the “pay-as-you-go” accounting method currently used by most companies. As such, companies in many cases under the new rule would have to deduct from their income statements the amount of the earned benefits, instead of simply deducting the amount the companies actually paid in a given year.

Critics of the proposal have complained that it would have an excess impact on financial results, as well as being difficult to manage.

The new rules would deal only with financial reporting of benefit obligations but does not address the funding of pension benefits, FASB officials said.

The plan comes at a time of soaring health care costs, longer life expectancy and earlier retirements which are posing economic problems for many companies, according to FASB Chairman Dennis R. Beresford.