IAS 19 — Employee contributions to defined benefit plans


This project arose out of requests made to the IFRS Interpretations Committee seeking clarification of paragraph 93 of IAS 19 Employee Benefits. That paragraph refers to the accounting for employee contributions set out in the formal terms of a defined benefit plan. The submitters specifically requested guidance on the accounting of employee contributions in respect of service.  The question was whether employee contributions were a reduction in cost to the entity of the short term benefit (e.g. salary) or a reduction in the post-employment benefit cost.

The Interpretations Committee discussed this issue and observed that the wording of paragraph 93 of IAS 19 seemed to suggest that all employee contributions in respect of service should be attributed to periods of service as a negative benefit in accordance with paragraph 93 of IAS 19.  However the Interpretations Committee also observed that contributions that are linked solely to the employee’s service rendered in the same period in which they are paid (e.g. if the contributions are a fixed percentage of salary throughout the entire period of employment) might also be considered to reduce the cost of short term employee benefits.  It was noted that the existing wording in paragraph 93 of IAS 19 did not make this clear and hence the Committee recommended to the IASB that this should be addressed through a narrow scope amendment to IAS 19.


Current status of the project

This project has been completed.  The IASB issued Defined Benefit Plans: Employee Contributions (Amendments to IAS 19) on 21 November 2013.


Project milestones

February 2013 IASB added a narrow scope amendment project to its agenda Project added on recommendation of the IFRS Interpretations Committee
25 March 2013 ED/2013/4 Defined Benefit Plans: Employee Contributions (Proposed amendments to IAS 19) published Comment deadline 25 July 2013
21 November 2013 Defined Benefit Plans: Employee Contributions (Amendments to IAS 19) issued Effective for annual periods beginning on or after 1 July 2014

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