Recognition of changes in defined benefit obligation and in plan assets
The Board agreed that entities should recognise all changes in the value of plan assets and the change in the post-employment benefit obligation in the financial statements in the period in which they occur. The staff noted that that the Board's tentative decision that the remeasurement component of pension cost should be presented separately in the income statement net of tax effects might alleviate some concerns about volatility because it allows entities to draw a subtotal of profit before tax and pension remeasurement.
The Board also agreed entities should recognise unvested past service cost in the period of a plan amendment. A Board member was concerned that the treatment of unvested amounts should be consistent between post-employment benefits and IFRS 2. However, this view was not generally accepted.
The Board had a vigorous debate on the accounting treatment of administration costs related to a pension plan.
The Board disagreed with a staff recommendation that they remove the definition of 'return on plan assets'; instead, they agreed to amend that definition. Several Board members were concerned that costs of administering a pension plan were included in the defined benefit obligation at all: they were expenses - they have nothing to do with the benefit promise.
Ultimately, the Board agreed (by majority) that IAS 19 should be amended to require administrative costs to be included in the defined benefit obligation unless (a) they relate to the management of plan assets and (b) the benefit promise does not depend on the return on those plan assets.
Board members were asked whether they intended to present an Alternative View in the Exposure Draft. Messrs Cooper, Kalavacherla, Yamada, and (potentially) Engstroem indicated that they would be presenting an Alternative View.