Deloitte comment letter on ED/2010/3 'Defined Benefit Plans'
We support the Board’s proposal to eliminate the option to defer recognition of changes in defined benefit assets and liabilities because the current deferred recognition represents a smoothing mechanism that often fails to capture and present relevant information on the status of the defined benefit plans. Further, the deferred recognition approach is inconsistent with the definition and recognition criteria of assets and liabilities in the Framework and it represents a source of complexity within IAS 19.
However, we do not support introducing other proposed changes, including a new presentation method, the elimination of the expected rate of return on plan assets and changes in definitions of employee benefits, in this short-term project. We believe these issues should be reconsidered as part of the Board’s planned fundamental review of the accounting for employee benefits and some should be timed to coincide with the Financial Statement Presentation Project (FSPP) which we would expect to address what is financial performance, what is other comprehensive income (OCI) and why, when and how amounts recognised in OCI are recycled to profit or loss. Therefore, until the completion of these projects, we support the status quo with respect to many of the issues addressed in the ED.