N.Y. Comp. Codes R. & Regs. Tit. 16 X app 6-C

LibraryNew York Codes, Rules and Regulations
CurrencyCurrent through Register Vol. 45, No. 52, December 27, 2023
CitationN.Y. Comp. Codes R. & Regs. Tit. 16 X app 6-C




Eddy, Commissioner:

The problem of the accounting treatment of pensions is one of increasing importance. This Commission last passed directly on the problem in Case 11800 involving the Village of Lake Placid. The Utility Workers Union, CIO, requested this Commission to reconsider its previous attitude as expressed in that case, and for that reason this proceeding was brought dealing with all of the prescribed accounting systems for the various utilities under the jurisdiction of the Commission.

It was announced at the bearing that tentatively the Commission, after having taken the briefs of the parties, would prepare proposed changes in its accounting regulations. Such changes are in the course of preparation, and will be considered at a future hearing.

There are presently before the State Legislature certain proposed amendments to the Public Service Law dealing with the problem. Since it does not presently seem possible to afford an adequate hearing on the proposed changes before the Legislature adjourns, the Commission feels that a general statement of the principles by which this Commission will be guided should presently be made.

There has been throughout the last thirty years a very great change in the social thinking of this country in respect to pensions. At one time, as defined by the Court of Appeals (see 268 N.Y. 228), pensions were regarded as a "gratuity of the sovereign". Gradually that concept has changed until today pensions are regarded not as a favor or a gift but as part of the compensation of the employee. We think there can be no better statement than that quoted by the Circuit Court of Appeals for the Seventh Circuit in the Inland Steel case, 170 F.2d 247:

" . . . we are convinced and find that the term 'wages' as used in Section 9(a) must be construed to include emoluments of value, like pension and insurance benefits, which may accrue to employees out of their employment relationship . . Realistically viewed, this type of wage enhancement or increase, no less than any other, becomes an integral part of the entire wage structure, and the character of the employee representative's interest in it, and the terms of its grant, is no different than in any other case where a change in the wage structure is effected."

By the same token, with the change in concept of the nature of a pension there has likewise been a change in the accounting concept. In November of 1948 and subsequent to our decision in the Lake Placid case, the Committee on Accounting Procedure of the American Institute of Accountants, dealing with accounting for annuity costs based on past services, said:

"1. When costs incurred under pension plan are based in part on services performed prior to the adoption of the plan, the problem arises whether that portion of the costs...

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