Post-employment benefit disclosures
In response to a request from the Board at the December meeting, the staff presented proposed disclosure requirements on the disaggregation of information about actuarial gains and losses arising on the defined benefit obligation and to the total amount of post-employment benefit expense in the period.
The Board deliberated theses proposed disclosure requirements in context of the package of disclosure requirements to be included in the forthcoming ED. The staff explained that disclosure requirements have been incorporated from IFRS 7 and the Fair Value Measurement guidelines to address requests from the Working group and other user groups to provide more information on the risks related to pension plans.
Several Board members expressed strong disagreement with the volume of disclosures and urged for the staff to eliminate some requirements as they are not relevant to the employer's interest in a pension plan and to streamline the remaining disclosure requirements in some way.
After a long discussion as to which disclosures are core to the understanding of the risks an employer is exposed to in relation to its pensions plans, it was agreed that a sub-group of Board members will review the disclosures and identify those that are essential. The revised list of disclosure requirements will be presented at the February Board meeting.
As part of the process of finalising the amendments to IAS 19 relating to termination benefits, the Board had to consider whether to amend the definition of termination benefits to include only benefits provided in exchange for termination of employment and not include benefits provided in exchange for employee service.
The staff is of the opinion that benefits that are provided in exchange for employees' future services should be regarded as post-employment benefits and not termination benefits. The Board noted that treating such benefits as post-employment benefits results in the same recognition as is required under SFAS 146, but that the labelling of the benefits would be different.
One Board member questioned whether the amendments would result in the amount of once-off severance packages being disclosed. The Board noted that the disclosure of termination benefits paid to key management personnel is an explicit requirement of IAS 24 and that no additional guidance needs to be incorporated in IAS 19.
The Board agreed with the amendment proposed by the staff and requested that clarification should be added that materiality is assessed both from the perspective of the entity and the individual employee.
The discussion then turned to the timing of the recognition of voluntary termination benefits. The Board agreed that voluntary termination benefits are not given in exchange for future service and that an entity should recognise the termination benefits when it no longer has the ability to withdraw an offer of those benefits. Where there is a timing difference between the date an entity cannot withdraw an offer and the date that employees accept the offer, measurement of the termination benefits will be based on the best estimate of the number of employees expected to accept the offer.