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Post-employment Benefits (including Pensions)

IASB Meeting Summaries and Observer Notes

 IASB December 2010



The IASB discussed the proposals in the exposure draft Defined Benefit Plans relating to settlements and curtailments, multi-employer plans and other matters addressed in the exposure draft or arising from the comment letters on the ED.

Settlements and curtailments

The Board tentatively decided:

  • to amend the definition of curtailment to limit it to a significant reduction in the number of employees covered by a plan. The definition of a curtailment would no longer include a reduction in benefits for future service. However, in some cases, past service cost arises if a change in benefits for future service results in a change in benefits attributed to past service.
  • to amend the definition of settlements to exclude plan amendments that result in past service cost and curtailments and to amend the definition of non-routine settlements to exclude benefit payments in accordance with the terms of the plan.
  • to require past service cost and gains and losses on curtailments and non-routine settlements to be presented in the service cost component.
  • to require gains and losses on routine settlements to be presented in the remeasurements component.
  • to confirm the proposals in the exposure draft for the disclosure of past service cost, curtailments and non-routine settlements but not to require distinguishing between these items if they occur together and are presented in the same component.

Multi-employer plans

The Board tentatively decided:

  • to retain the requirement in IAS 19 Employee Benefits that an entity should account for its participation in a defined benefit multi-employer plan in the same way as for any other defined benefit plan unless insufficient information is available, in which case an entity should account for the plan as if it were a defined contribution plan;
  • to confirm the disclosure requirements proposed in the exposure draft for multi-employer plans, but amended to limit the disclosure of the withdrawal liability to qualitative information and to specify that an entity should recognise and measure any withdrawal liability in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets; and
  • to confirm the disclosures proposed in the ED for multi employer plans treated as if they were defined contribution plans with the following amendments:
    • to reduce the period for the required disclosure of future contributions from 5 years to 1 year.
    • to require an indication of an entity's level of participation in a plan. Such a requirement could be met by disclosing the proportion of total members or the proportion of total contributions.

Other issues

The Board tentatively decided:

  • to require plan administration costs to be expensed as incurred, for practical reasons. The Board directed the staff to seek feedback on this decision from the Employee Benefits Working Group.
  • to confirm the proposals in the ED for the accounting for taxes payable by the plan.
  • to confirm the proposed clarification in the ED that mortality assumptions include current estimates of expected changes in mortality.
  • to withdraw the proposal in the ED to incorporate IFRIC 14 The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction into IAS 19.
  • to withdraw the proposal in the ED that would have required entities to consider expected future salary increases in determining whether a benefit formula allocates a materially higher level of benefit in later years.
  • not to make any additional amendments regarding interim reporting.
  • to confirm the proposal in the ED to update the disclosures:
    • for defined benefit state plans to be consistent with the disclosures for defined benefit multi-employer plans if the information for the state plans is available.
    • for group plans to be consistent with the disclosures for defined benefit plans, and for group plans to allow the information to be included by cross-reference to disclosures in the parent's financial statements if:
      • the parent's financial statements separately identify and disclose the information required for the group plan, and
      • the parent's financial statements are available to users of the financial statements on the same terms as the financial statements of the entity and at the same time

Next steps

In January, the Board intends to discuss:

  • the timing of recognition of curtailments and settlements,
  • accounting for risk-sharing features; and
  • transition.

Date: 12/13/2010