This site uses cookies to provide you with a more responsive and personalised service. By using this site you agree to our use of cookies. Please read our cookie notice for more information on the cookies we use and how to delete or block them.
The full functionality of our site is not supported on your browser version, or you may have 'compatibility mode' selected. Please turn off compatibility mode, upgrade your browser to at least Internet Explorer 9, or try using another browser such as Google Chrome or Mozilla Firefox.

Limited amendments to IAS 19 proposed

  • IASB (International Accounting Standards Board) Image

Mar 25, 2013

The IASB has published ED/2013/4, "Defined Benefit Plans: Employee Contributions (Proposed amendments to IAS 19)." The proposed amendments aim to clarify the accounting for employee contributions set out in the formal terms of a defined benefit plan if the contributions are linked to service. Comments are requested by July 25, 2013.

The narrow-scope IASB project that led to issuing this exposure draft (ED) 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 question was whether employee contributions in respect of service should in all cases be attributed to periods of service as a negative benefit in accordance with IAS 19, paragraph 70.

The IASB discussed the matter during its February 2013 meeting and came to the conclusion that contributions from employees or third parties that are linked solely to the employee’s service rendered in the same period in which they are paid may be treated as a reduction in the service cost and accounted for in that same period instead of attributing the contributions to periods of service in accordance with paragraph 70.

As an example of contributions that may be treated as a reduction in the service cost, the ED cites contributions that are a fixed percentage of the employee’s salary, when the percentage of the employee’s salary does not depend on the employee’s number of years of service to the employer.

The IASB also decided to specify in paragraph 93 that the negative benefit from employee contributions when these are not recognized as a reduction in the service cost in the same period in which they are payable is attributed to periods of service consistently with the application of the gross benefit in accordance with paragraph 70 to ensure consistent attribution of the net benefit.

If finalized, the amendments would apply retrospectively whereby the exact date will only be determined after exposure. Comments must be submitted to the IASB no later than July 25, 2013.

Please click for:

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.