• July 2005 IASB Exposure Draft
• Discussed at October 2009 IASB Meeting
• 2 June 2011 – Near Final Draft of amendments to IAS 19 published. Click for More Information
• 16 June 2011 – Amended IAS 19 published. Click for More Information

Timetable

• Click for IASB Project Timetable

Background

In June 2005, the Board published an Exposure Draft of Amendments to IAS 19 dealing with the accounting for termination benefits, together with proposed amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets. With regard to termination benefits, the IASB proposed:

• termination benefits to encourage employees to leave service voluntarily (voluntary termination benefits) should be recognised when employees accept the entity's offer of those benefits.
• termination benefits provided as a result of an entity terminating employment (involuntary termination benefits) should be recognised when the entity has communicated its plan of termination to the affected employees and the plan meets specified criteria, unless the involuntary termination benefits are provided in exchange for employees' future services (ie in substance they are a 'stay bonus'). In such cases, the liability for those benefits should be recognised over the period of the future service.

Discussion at the October 2009 IASB Meeting

The staff reminded the Board that it had published an Exposure Draft of proposed amendments to IAS 19 addressing termination benefits in June 2005 (this was issued in conjunction with the proposed amendments to IAS 37).

The Board had considered comments received and had concluded its redeliberations in May 2008. However, the amendments had not been balloted or published pending further deliberations on IAS 37. With the conclusion of redeliberations on IAS 37, the staff asked for the Board's intentions for the IAS 19 issues.

The Board directed the staff to prepare a ballot draft of the amendments and that the amendments should be issued as soon as they are ready. No Board members indicated their intention to dissent. Ms McConnell indicated that she would likely abstain, since all redeliberations occurred prior to her appointment as an IASB member.

June 2011: Near Final Draft of amendments to IAS 19

The IASB has released a Near Final Draft (NFD) of amendments to its standard on accounting for pensions and other postretirement benefits (OPEB). This project forms part of the Memorandum of Understanding between the IASB and the FASB and represents the first step in a broader reconsideration of the accounting for pensions and OPEB. The IASB believes the amendments will yield significant improvements to the transparency and comparability of pension obligations. The following areas are affected by the amendments:

• recognition of changes in the net defined benefit liability (asset) including immediate recognition of defined benefit cost, disaggregation of defined benefit cost into components, recognition of remeasurements in other comprehensive income, plan amendments, curtailments and settlements;
• disclosures about defined benefit plans;
• accounting for termination benefits, including distinguishing benefits provided in exchange for service and benefits provided in exchange for the termination of employment and affect the recognition and measurement of termination benefits;
• miscellaneous issues, including the classification of employee benefits, current estimates of mortality rates, tax and administration costs and risk-sharing and conditional indexation features; and
• other matters submitted to the IFRS Interpretations Committee.

Access to the NFD on the IASB's website is for subscribers only. The publication of the amended IAS 19 is expected later this month.

June 2011: IASB issues amended IAS 19

On 16 June 2011, the IASB published an amended IAS 19 Employee Benefits.

The amended IAS 19 eliminates the use of the 'corridor' approach when accounting for pensions and other postretirement benefits and instead mandates all remeasurement impacts be recognised in OCI (with the remainder in profit or loss).

Also changed in IAS 19 is the treatment for termination benefits, specifically the point in time when an entity would recognise a liability for termination benefits. The final amendments do not adopt the equivalent US-GAAP requirements verbatim (which requires individual employees to be notified), but the recognition timeframe may be extended in some cases.

Finally, various other amendments to IAS 19 may have impacts in particular areas. For instance, employee benefits not settled wholly before twelve months after the end of the annual reporting period would be captured as an 'other long term benefit' rather than a 'short term benefit', and whilst presented as a current item in the statement of financial position, would be measured differently under the amendments.

Click for: IASB press release on the amendments to IAS 19 (link to IASB website)