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IAS Plus Update — Closing the corridor – IASB proposes significant changes to pension accounting

Published on: 16 May 2010

On 29 April 2010 the International Accounting Standards Board (IASB or Board) published Exposure Draft ED/2010/3 Defined Benefit Plans – Proposed amendments to IAS 19. Although the IASB decided not to carry forward some of the more fundamental proposals contained in the March 2008 discussion paper Preliminary Views on Amendments to IAS 19, there is no doubt that the proposals in the ED, if finalised, would have a significant effect on many entities with defined benefit plans.

Although the financial statement impact will vary from entity to entity, many can expect to report lower net income, have less net income volatility but an increase in other comprehensive income (OCI) volatility and recognise a larger liability or smaller asset in the statement of financial position. The proposals may also cause an entity to become more conservative in its investment strategies relating to its defined benefit plan which could lead to higher costs of providing the associated benefits. The potential impacts of the proposals are discussed in more detail in the publication below.


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