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Issue Description:

The requirements of IFRIC 14 IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction may produce unintended consequences in the treatment of voluntary prepaid contributions under a minimum funding requirement. This is because paragraph 22 of IFRIC 14 requires an entity to include particular expected cash outflows in assessing whether there is an asset at the reporting date. In some cases, including these cash flows implies there is a liability at the reporting date when there is not.

Discussion at the November 2008 IFRIC Meeting

The staff acknowledged that this issue causes problems in cases where an entity voluntarily prepays contributions under a minimum funding requirement, but proposed to address this issue in the upcoming ED/Standard on employee benefits accounting as a result of the IASB's discussion paper on this area.

One IFRIC member noted that this would not happen before 2011 and highlighted that the numbers produced would be wrong and IFRIC would confirm this, but not fix it. This member was sympathetic to address this issue before any improved Standard on pension accounting. Most IFRIC members shared this view.

Finally, it was decided to propose an amendment to IFRIC 14 with regard to paragraph 22 of the agenda to resolve the issue described above.

Discussion at the May 2009 IFRIC Meeting

At the IASB's meeting in January 2009, the Board decided to proceed with its own project to amend IFRIC 14 to address the issue. Consequently, the IFRIC decided to remove the issue from its agenda.