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Post-employment benefits

Date recorded:

Project timetable

The staff noted that the forthcoming exposure draft was unlikely to be completed until July 2009 (this was contrary to the optimistic assessment in the Board paper).

Disclosures — defined benefit plans

During a long and frustrating debate, the board decided:

  • not to provide additional guidance on materiality (contrary to the staff recommendation)
  • to replace the disclosure objectives in IAS 19 with objectives similar to those in IFRS 7 Financial Instruments: Disclosures and IFRS 4 Insurance Contracts
  • to require disclosure of information about how the defined benefit plan is managed
  • to use a principle-based approach for the disclosures on the entity's actuarial assumptions based on similar requirements in IFRS 4.

This topic was especially contentious, with Board members split on the usefulness of disclosure of items such as mortality assumptions. A Board member noted that the real issue was how to disaggregate information in a meaningful way: for example, it would be more useful to know how relevant to the workforce in question was the mortality table being used. The staff cautioned that if the Board wanted detail in one area of the actuarial assumptions, it might as well require the whole lot.

In the end, the Board agreed with the staff's proposed approach, with some modifications in how it was expressed.

  • additional disclosures on the risks arising from defined benefit plans including:
    • qualitative disclosures, including risk management policies and investment strategies
    • sensitivity analysis
    • expected maturity analysis for the defined benefit obligation
    • comparison of actual versus estimated contribution.

During the discussion, several Board members objected to how the risks had been defined, in particular 'funding risk', which was essentially the same as 'liquidity risk'. The Board requested the staff not to invent new and potentially confusing labels, but rather to explain what the disclosure was intended to achieve.

Disclosure - Multi-employer plans

With little debate, the Board agreed to propose the following additional disclosures for multi-employer plans:

  • (a) A description of the nature of the multi-employer plan including but not limited to:
    • (i) A description of the regulatory framework in which the plan operates.
    • (ii) A description of the funding arrangements in place including the method used to determine the participant's rate of contributions and any minimum funding requirements.
    • (iii) The extent to which the entity can be liable to the plan for other participants in the event of their insolvency.
  • (b) its best estimate of the contributions it expects to pay to the plan during the next annual period. Such information may be disaggregated into (1) contributions required by funding arrangements or regulation, (2) discretionary contributions and (3) non-cash contributions.
  • (c) details of any agreed deficit/surplus allocation on wind-up, or the amount that is required to be paid on withdrawal.
  • (d) the total and employer's proportion of the number of active members, retired members, and former members entitled to benefits.

Curtailments and settlements

The Board agreed that

  • the existing requirements on curtailments and settlements are removed
  • curtailments are included in negative past service costs, and disclosure is required of the effect of plan amendments with a narrative description of the amendments; and
  • a definition of 'non-routine settlements' based on the IFRIC May 2008 Update wording is added to the definitions in IAS 19 and separate disclosure of such 'non-routine settlements' is required.

Agenda paper 20C, containing staff recommendations for transitional provisions, was not discussed.