At the September meeting the Board noted that post-employment benefit promises have three phases:
- An accumulation phase during which the employee renders service in exchange for the promise of remuneration in the future. This phase ends when the employee ceases employment.
- A deferment phase, which occurs after the employee has completed employment but before the benefit payment has started (eg during a pension deferment period or a sickness waiting period).
- A payout phase during which the employer's liability to the employee for previously deferred remuneration is settled.
The two questions raised at that meeting were:
- Which phase or phases should determine the classification of the benefit promise?
- How should the benefit promise in each phase be measured?
After discussion, the Board agreed on the following pragmatic cut-off for the definition of benefit promises in the project:
- the definition of benefit promises should refer to the accumulation phase only. In particular, longevity risk should not affect the classification, but would be factored into the measurement of the obligation; and
- the liability for a benefit promise should be measured according to its definition whether the employee is the accumulation, deferment, or payout phase.