IAS 19 – Employee benefit plans with a guaranteed return on contributions or notional contributions

Date recorded:

The Committee received a request seeking clarification of the accounting in accordance with IAS 19 Employee Benefits for contribution-based promises.  An underlying concern in the submission was whether the revisions to IAS 19 in 2011, which, for example, clarified the treatment of risk sharing features related to defined benefit obligations, affect the accounting for contribution-based promises.

The Committee had attempted to develop a solution to improve the financial reporting for employee benefit plans with a guaranteed return on contributions or notional contributions; however, was unable to reach a consensus in identifying a suitable scope for an amendment.  The Committee observed that the accounting for the plans in accordance with IAS 19 is problematic and has resulted in diversity in practice, and in the Committee’s view, developing accounting requirements for these plans would be better addressed by a broader consideration of accounting for employee benefits, potentially through the research agenda of the IASB.  Accordingly, due to the difficulties encountered in making progress with the issue, the Committee tentatively decided to remove the project from its agenda in January 2014.

The purpose of this paper was to provide an analysis of the three comment letters received on the tentative agenda decision and to ask the Committee whether it agreed with the staff recommendation that the agenda decision should be finalised.


The Chairman kicked off the discussion, and drew the Committee members’ attention to the wording in the last sentence of the agenda decision that stated that “... the IASB should consider prioritising work on [this issue] if it does not have the resources to address the accounting for employee benefits more broadly in the medium term”. He cautioned against the Committee advising the IASB how to prioritise its workload, and recommended that the Committee highlighted the importance of the issue, but left the IASB to determine its own priorities.

Several Committee members noted that they concurred with the Chairman’s comments, and one Committee member pointed out the difficulty of addressing the issue without the broader issues in IAS 19 being addressed. 

The Chairman proposed that the agenda decision should be finalised, subject to amendments made to the wording in the final sentence, so that the sentence highlighted the importance of the issue, without providing advice to the IASB with respect to prioritisation of the issue.

The Committee members unanimously agreed with the Chairman’s proposal.

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