IAS 19 – Allocation of benefits to periods of service
Paragraph 67 of IAS 19 Employee Benefits requires that benefits generally should be allocated to periods of service according to the benefit formula. However, if the benefit formula allocates a materially higher level of benefit to later years of service, then straight-line allocation should be used.
IFRIC considered the issue of whether expected increases in salary should be taken into account in determining whether a benefit formula expressed in terms of current salary will give rise to materially higher levels of benefits in later years.
Current status of the project
At its December 2003 meeting, IFRIC reaffirmed its position that it will not address this issue since (a) it is not a priority issue, (b) IAS 19 appears clear enough to interpret, and (c) any proposed interpretation by IFRIC would require an amendment to IAS 19 which would not happen anytime soon.