Post-employment benefits

Date recorded:

Discount rate for post-employment benefit obligations

The Board agreed to amend IAS 19 paragraph 78 to remove the requirement to use a government bond rate when there is no deep market in high quality corporate bonds. Instead, the objective should be to estimate the rate for high quality corporate bonds in all cases.

The Board also agreed that additional guidance should be provided on how to estimate a high quality corporate bond rate. This would draw on the principles being developed in the Fair Value Measurement project but, until that project is finalised and an IFRS issues, no cross-references would be used. Instead, the current guidance in IAS 39 AG69-AG82 would be referenced.

Exposure Draft to be issued for 30-day comment period

The Board agreed that because this issue is of wide-spread application, it would assist preparers greatly if they could address it promptly. An amendment to IAS 19 now would help to solve a significant issue in the application of IFRS. Consequently, the Board agreed unanimously to propose the necessary amendments to IAS 19 using the 30-day comment period approach: the issue was tightly defined and the matter was urgent (as provided in the IASB Due Process Handbook, paragraph 42).


The Board discussed staff proposals to require disclosure of alternative measures of the defined benefit obligation; such disclosure had been suggested by some as providing useful information and mitigating some concerns surrounding the current IAS 19 requirements. The staff suggested the following as possible alternative measures that might be candidates for disclosure:

  • Settlement value (including buy-out amount)
  • Fair value
  • Accumulated benefit obligation

After a short discussion, the Board agreed to propose that an entity disclose the accumulated benefit obligation. The Invitation to Comment would ask constituents whether other alternative measures should be provided.

The Board then reviewed the totality of the proposed disclosure package.

The Board agreed to modify the requirement (adapted from IAS 19.120A(q)) that an entity should provide its best estimate of the contributions it expects to pay to the pension plan during the next annual period, to require disaggregation into:

  • contributions required by funding arrangements or regulation,
  • discretionary contributions and
  • non-cash contributions.

The Board had a protracted debate over a suggestion by some Board members that entities should disclose a sensitivity analysis for the net position of the defined benefit asset or obligation. Board members noted that this would be challenging if the plan was heavily invested inequity instruments as opposed to debt instruments. Supporters thought that this information would be available for all entities anyway and that the incremental cost of providing the disclosure would be minimal. Others disagreed: that might be the case for single jurisdiction plans, but was less likely to be the case for multi-employer plans, insured plans and pension plans for a large multi-national group. These Board members questioned the utility of the disclosure to the users of the financial statements, especially how such disclosure would assist users to assess the future cash outflows of the sponsoring entity (as opposed to the plans). They were also very concerned about providing information about risks that do not exist from the point of view of the sponsoring entity - one Board member calling this a 'deception'.

Ultimately, the Chairman asked the staff to work with the Board members involved to see whether it was possible to reconcile the views, and to propose alternative sensitivity disclosures. These would be circulated to the Pensions Working Group for their views.

If possible, the staff will present their draft proposals later in the meeting.


The Board agreed that the exposure draft should not include specific transitional provisions. Thus, the general requirements of IAS 8 and IFRS 1 would apply. The amendments would apply retrospectively.

The Board agreed that IAS 19 paragraphs 153-156 and IFRS 1, Appendix D, paragraph D10 are redundant and should be deleted.

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.