Convergence Topics

Date recorded:

The Board considered the scope of a project on convergence of pension accounting standards and concluded:

Include in scope of convergence project:

  • How the total change in value of plan assets should be reported in a statement of comprehensive income
  • Disclosure of an allocation of plan assets across broad categories, such as equities, fixed income securities, property, etc.
  • Whether the immediate recognition of actuarial gains and losses arising on the defined benefit obligation should be retained as an option (as currently in IAS 19), made mandatory, or prohibited. Those who favour immediate recognition feel that the IAS 19 corridor approach amounts to 'income smoothing'. Those who support a corridor or spreading approach feel that such approach is appropriate given (i) the allocation of benefits earned to periods of service and (ii) the recognition of unvested past service cost over the vesting period.
  • Whether the 'asset ceiling' of IAS 19 should be retained.
  • Whether certain guidance from FASB Statements 106 and 112 (which deal with non-pension benefits) should be incorporated into a revised IAS 19.
Exclude from scope of convergence project:
  • Whether the defined benefit obligation should reflect current salaries rathe3r than expected final salaries
  • Whether a defined benefit plan should, in some circumstances, be fully consolidated into the3 entity's financial statements.

The Board voted to commence the Convergence Project as outlined during the joint IASB/FASB meeting on 18 September.

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