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IAS 19 — Changes to a plan caused by government

Date recorded:

The IFRIC discussed a request to provide guidance on how to account for changes in a defined benefit plan resulting from government action: as an actuarial gain or as a past service cost.

Mainly based on the guidance in paragraphs 73, 86 and 88 of IAS 19 Employee Benefits the staff analysis pointed out:

  • When a change in a plan caused by a government affects the employer's cost of providing the benefits (that is,actuarial assumptions), this change should be accounted for as an actuarial gain or loss
  • When a change in a plan caused by a government affects the benefits to be received by the employees for services before the change, this change should be accounted for as a past service cost.

The IFRIC agreed with the staff analysis that there was sufficient guidance in the Standard, however, acknowledged that the principles are sometimes difficult to apply in practice. The staff was asked to adapt its analysis for inclusion in the tentative agenda decision.

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