IAS 19 — The asset ceiling and minimum funding requirements (IFRIC D19)

Date recorded:

The IFRIC discussed a variety of amendments to D19 reflecting the proposals in the comment letters received.

Additional guidance and examples on what is a minimum funding requirement

The staff noted that it had added requirements to the scope of the Interpretation such that:

  • the Interpretation only applies to defined benefit plans. Therefore, any requirements to contribute to a defined contribution plan are not minimum funding requirements for the purpose of the Interpretation.
  • minimum funding requirements are any requirements that create a legal or constructive obligation for the entity to make contributions to fund a post-employment or other long-term defined benefit plan (emphasis added). Therefore a benefit promise defined in terms of notional contributions is not a minimum funding requirement for the purpose of the Interpretation.

IFRIC members generally supported these scope clarifications, but had concerns about the manner in which the clarifications had been expressed in the Interpretation.

An entity's right to a refund

The IFRIC agreed that an entity should recognise a potential refund as an asset only if the entity has an unconditional right to that refund. The IFRIC agreed that the entity's intentions with respect to the use of the surplus do not affect the existence of the asset. In addition, if the entity's right to a refund depends on the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity, the entity does not have an unconditional right to the refund (and therefore should not recognise an asset).

Assumptions underlying the future service cost used to determine the reduction in future contributions

The IFRIC discussed a wording that would require an entity to determine the maximum economic benefit that is available from refunds, reductions in future contributions or a combination of both. An entity should not recognise economic benefits from a combination of refunds and reductions in future contributions that are mutually exclusive.

IFRIC members expressed concerns that the Interpretation should be based on facts and circumstances existing at the balance sheet date, rather than assumptions about the future. Thus, an entity should assume a stable workforce unless (at the balance sheet date) something had happened that would negate that assertion, for instance, closing a plan to new members. The IFRIC noted that closing an existing plan to new members was not a curtailment; however the act of closing the plan to new members did affect the defined benefit obligation and minimum funding requirements.


The IFRIC agreed that the title of the Interpretation should be the title should be IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction.


The IFRIC agreed with a staff analysis that re-exposure was not necessary.

Effective date

The IFRIC agreed that the Interpretation should be effective for financial years beginning on or after 1 January 2008.


The IFRIC Chairman asked whether, based on the draft Interpretation and the discussions today, whether any IFRIC members would not support the Interpretation. None of the IFRIC members indicated a dissent.

Next Steps

The staff will present a revised draft Interpretation to the IFRIC as soon as possible, with the intention that it will be presented to the June 2007 meeting of the IASB for their approval, subject to written ballot. Provided that the IASB approves the Interpretation, it should be issued in July 2007.

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