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IAS 19 Employee Benefits allows participants in defined benefit multi-employer plans to use defined contribution accounting and provide additional disclosures if the information necessary for defined benefit accounting is not available. Draft Interpretation D6 Multi-employer Plans proposes guidance on:
- when a plan meets the definition of a multi-employer plan,
- how defined benefit accounting should be applied to such plans and,
- what to do when the necessary information might not be available.
D6 notes that multi-employer plans involve sharing between the participants in the plan of the actuarial risks associated with their current and former employees. In other words, participation in a multi-employer plans creates different assets and liabilities for the participating employers from those that would arise for those employers if they had single entity plans.
D6 proposes a requirement that, if possible, a multi-employer plan is to be measured on the basis of assumptions appropriate for the plan as a whole, rather than for a specific participating entity. The plan is then allocated, if possible, across the participants so that a participating entity recognises an asset or liability that reflects the extent to which the surplus or deficit in the plan will affect its future contributions.
D6 requires an entity to "make every practicable effort to apply defined benefit accounting to multi-employer plans in which it participates."
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