Post-employment Benefits

Date recorded:


The Board discussed the presentation of pension costs. The Board was reminded that it had previously reached the following tentative decisions related to presentation:

  • Recognition of all components of pension cost in the period in which they occur
  • Disaggregation of the total pension cost into an employment component (service cost), a financing component (interest cost), and a remeasurement component (actuarial gains and losses on the defined benefit obligation and the total return on plan assets)
  • Presentation of all of those components in profit or loss, displaying the remeasurement component separately net of related income taxes

The Board was asked to reconsider those tentative decisions and re-evaluate them in the light of the decisions made or proposed in other projects: the proposal of single statement of comprehensive income and the other comprehensive income (OCI) presentation option for equity instruments in IFRS 9.

The Board discussed the issue, with Board members expressing a wide variety of opinions. Several approaches and combinations of approaches were discussed, ranging from full recognition in profit or loss to presenting all remeasurement components in OCI with no recycling.

Finally the Board reaffirmed its decision to require full recognition of all components of pension cost in the period in which they occur.

After a considerable discussion, the Board agreed that the proposals in the forthcoming post-employment benefits exposure draft (ED) should be consistent with the proposal of a single statement of comprehensive income. Therefore, the Board agreed in principle that the employment and financing components should be presented in profit or loss and the remeasurement component in the OCI with no recycling. The Board also tentatively agreed to align the timing of this proposal with the timing of the ED on the single statement of comprehensive income.

The Board also discussed the notion of service cost and remeasurement related to service cost. The Board agreed in principle that the related remeasurement should be presented in profit or loss and not in OCI. The Board directed the staff to explore such an approach, in particular with reference of proposal of one Board member to account in profit or loss for the interest accretion on a net deficit instead of gross interest related to expected return on the assets and discount of the defined benefit obligation.


The Board discussed its tentative decision to require disclosure of accumulated benefit obligation (ABO) - the defined benefit obligation excluding projected growth of salaries.

The staff and some of the Board members said that such a measure is neither useful nor meaningful and that, in some jurisdictions, the methodology for calculating the ABO was not consistent.

Other Board members disagreed as they believed that providing of such information is useful. They argued that in other jurisdictions ABO is disclosed without much diversity in its calculation. They also pointed to views of some constituents that the ABO is more meaningful for measuring the pension obligation. Moreover, staff also pointed out that disclosure of ABO is required under the US GAAP.

With a bare majority of votes the Board reaffirmed its previous tentative decision to require disclosure of the ABO.

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