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Employee Future Benefits – Use of a Funding Valuation [ED]

Comment period ended December 16, 2019

Next steps:

The AcSB is deliberating feedback on its Exposure Draft

Last updated:

September 2019


On April 29, 2019, the Accounting Standards Board (AcSB) released an at-a-glance bulletin entitled, Employee Future Benefits.

Firstly, the bulletin notes that the AcSB considered an issue that stakeholders raised about using the funding valuation in the measurement of the defined benefit obligation in relation to Ontario’s Provision for Adverse Deviations (the PfAD issue). The AcSB was concerned about potential diversity in practice that could arise in connection with Section 3462, Employee Future Benefits, in Part II of the CPA Canada Handbook – Accounting. The AcSB decided not to undertake any standard-setting action on the PfAD issue, but rather communicate its intent. The AcSB wrote a letter to the Canadian Institute of Actuaries to communicate its intent to reduce diversity arising in practice. The key points from this letter have been summarized in the bulletin, along with additional background information.

Secondly, Quebec’s pension regulator established a new regulation in 2016 for private sector plans in that province — the Stabilization Provision. The AcSB has been considering an application issue regarding this Stabilization Provision and Section 3462 for which diversity has been arising in practice. In April 2019, the AcSB announced that it has set up a new project to clarify its intent regarding the use of the funding valuation in measuring the defined benefit obligation in relation to Quebec’s Stabilization Provision. The AcSB plans to issue an exposure draft no later than the third quarter of 2019 in response to stakeholder feedback about diversity arising in practice on accounting for changes in pension legislation.


Other developments

September 2019

On September 16, 2019, the AcSB issued an Exposure Draft proposing amendments to Section 3462, Employee Future Benefits. The AcSB seeks feedback on its proposals to modify the guidance on using an actuarial valuation for funding purposes in the measurement of the defined benefit obligation. These proposals apply to private enterprises and not-for-profit organizations applying the standards in Parts II and III. Comments are requested by December 16, 2019.

April 2019

On April 29, 2019, the AcSB released an at-a-glance bulletin entitled, Employee Future Benefits.


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