Project timetable

The staff presented the most recent proposed project timetable for this phase of the post-employment benefits project. The plan provides for an exposure draft to be published in November 2009 with a 120-day comment period and a final IFRS in the first half of 2011.

Defining the remeasurement component

The staff reminded the Board that in January 2009, it had decided that the change in a post-employment benefit obligation should be disaggregated into employment, financing, and remeasurement components. At this meeting the Board decided that it should specify what was included in the remeasurement component.

The Board agreed also that the current service cost component of the IAS 19 pension cost should be presented on a separate line within profit and loss.

Thereafter, achieving consensus was more difficult. The Board appeared to be confused about what the staff was proposing and how it was consistent or inconsistent with the principles of the current project. The staff proposed that the Board require that interest income be calculated on an expected rate of return. Several Board members disagreed with this suggestion, or at least with how the staff had expressed it. Some of these Board members could accept the method if the expected rate of return was based on the actual assets in the pension plan. One Board member thought that the 'remeasurement' component of the pension assets was a matter of fact - there were no assumptions such as those that are inherent in estimating the benefit obligation. Assets went up or down in value. Disaggregating that movement in to classes of assets (government bonds, corporate bonds, quoted equity, non-quoted equity, real estate, etc) was more likely to provide useful information to users than the expected rate of return. Not all Board members agreed with this analysis.

In an attempt to close the debate, the Chairman asked the Board whether the interest cost component should include a notional cost or return on the pension surplus or deficit (the 'net pension position'). The Board voted (by a significant majority) that interest cost should be reported separately from remeasurements and should not include any return on plan assets.

In addition, the Board agreed that the change in plan assets and the change in the actuarial gain or loss on the defined benefit obligation should be in the remeasurement component.

A Board member noted that this decision would have the effect of reporting the total change in the pension fund through profit or loss, a position that alarmed him.

The Board did not have time to discuss the presentation of past service cost, the effects of settlements and curtailments, and the effect of the asset ceiling, although one Board member noted that (in a 'no deferral' world) the distinction between current service cost, past service costs, and settlements/curtailments had no effect.