We comment on pensions discount rate ED
01 Oct 2009
Deloitte Touche Tohmatsu has submitted comments on IASB Exposure Draft (ED) 2009/10 Discount Rate for Employee Benefits, which was published 21 August 2009. IAS 19 Employee Benefits requires an entity to determine the rate used to discount employee benefits with reference to market yields on high quality corporate bonds.
An excerpt from our letter of comment on the ED: We believe it is appropriate for the Board to proceed with the proposed amendment relating to the determination of the discount rate for employee benefit obligations, while keeping, for the time being, the general principle of determining this discount rate by reference to market yields on high quality corporate bonds. The urgency to act on the matter is justified by the significant increase of the spread between the yield on high quality corporate bonds and on government bonds as a result of the financial crisis. However, as explained in our detailed comments, we believe further clarifications are required to ensure that the amendment is applied consistently by entities. In particular, we believe that the Board should clearly establish the objective of estimating the discount rate in the absence of a deep market for high quality corporate bonds. |