IAS 19 — Employee benefit plans with a promised return on contributions or notional contributions

Issue description

This issue involves accounting for plans that have a stated contribution level but provide a minimum guaranteed return. Under IAS 19 Employee Benefits these would technically be defined as defined benefit plans because of the minimum guarantee. Without the guarantee they would be defined benefit plans.


Current status of the project

After issuing a Draft Interpretation, the (then) IFRIC agreed to remove this topic from its agenda at its November 2006 meeting because the IASB has begun a project on post-retirement benefits, provided it had the option to restart the project should developments in the IASB's project make it necessary or appropriate.

In May 2012, the IFRS Interpretations Committee decided to reconsider the work it had done when it issued Draft Interpretation D9 Employee Benefit Plans with a Promised Return on Contributions or Notional Contributions. The Committee had previously referred the issue to the IASB to be included in the IASB’s project on post-employment benefits. Although the IASB had initially intended to address contribution-based promises in that project, it later decided to defer this work to a future broader project on employee benefits.

The Committee had attempted to develop a solution to improve the financial reporting for employee benefit plans with a guaranteed return on contributions or notional contributions. However, the Committee was unable to reach a consensus, and in May 2014 confirmed its decision to remove this project from its agenda. The Committee's decision is reproduced below:


The Interpretations Committee observed that the accounting for the plans that fall within the scope of the project is an important issue. These plans are part of a growing range of plan designs that incorporate features that were not envisaged when IAS 19 was first developed. The accounting for these plans in accordance with IAS 19 is problematic and has resulted in diversity in practice.

The Interpretations Committee attempted to develop a solution to improve the financial reporting for such plans. However, it was unable to reach a consensus in identifying a suitable scope for an amendment that would both:
  1. improve the accounting for a sufficient population of plans such that the benefits would exceed the costs; and
  2. limit any unintended consequences that would arise from making an arbitrary distinction between otherwise similar plans.

In the Interpretations Committee’s view, developing accounting requirements for these plans would be better addressed by a broader consideration of accounting for employee benefits, potentially through the research agenda of the IASB. The Interpretations Committee acknowledged that reducing diversity in practice in the short term would be beneficial. However, because of the difficulties encountered in progressing the issues, the Interpretations Committee decided to remove the project from its agenda. The Interpretations Committee notes the importance of this issue because of the increasing use of these plans. Consequently, the Interpretations Committee would welcome progress on the IASB’s research project on post-employment benefits.


Project milestones

8 July 2004 IFRIC D9 Employee Benefit Plans with a Promised Return on Contributions or Notional Contributions published Comment deadline 21 September 2004
November 2006 Removed from the IFRIC active agenda  
May 2012 Project reactivated after the issue of IAS 19 Employee Benefits (2011)  
May 2014 Removed from the IFRS Interpretations Committee agenda  

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