• IAS 32 Financial Instruments: Presentation and Disclosure


  • IFRIC D9 Issued 8 July 2004
  • Comment Deadline 21 September 2004
  • The draft Interpretation was available publicly on the IASB's Website during the comment period.
  • Click for Press Release (PDF 25k).
  • November 2006 – project removed from IFRIC agenda because the IASB has begun a project on Post-employment Benefits. A final Interpretation will not be issued.

Deloitte Letter of Comment on IFRIC D9

Draft Interpretations are proposals that are not yet final.

Summary of IFRIC D9

D9 proposes guidance on how IAS 19 Employee Benefits should be applied to employee benefit plans with a promised return on actual or notional contributions. Examples of such plans are:

  • (a) a plan in which a contribution is made each year based on the employee's current salary and the employee receives a benefit (a lump sum or an annuity) equal to the contributions plus the higher of (i) the actual return generated on the contributions and (ii) a minimum fixed return on the contributions over the period to when the benefit is paid; and
  • (b) a plan in which the promised benefit is a notional contribution each year plus a return on the notional contribution that is the higher of (i) the return based on specified assets, for example the return on quoted bonds, and (ii) a fixed return, for example 4%. The plan may or may not hold assets.

D9 argues that such plans are defined benefit plans and proposes guidance on the treatment of the following benefits:

  • (a) a guarantee of a fixed return,
  • (b) a benefit that depends on future asset returns, and
  • (c) a combination of (a) and (b).

D9 proposes that the liability for a benefit of a guarantee of a fixed return should be determined by projecting forward the contributions at the guaranteed fixed return to estimate the amount that will ultimately be paid. That amount should be discounted back to a present value using the high-quality corporate bond rate required by IAS 19. In contrast, for benefits that depend on future asset returns, D9 proposes that an estimate of the amount that will ultimately be paid should not be made. Instead, the liability should be determined by the value of the assets at the balance sheet date. Lastly, D9 proposes that the liability for a benefit that combines a guaranteed fixed return and the returns on future assets should be the higher of the liabilities for each separate element.

Decision at November 2006 IFRIC Meeting

The IFRIC agreed to remove D9 from its agenda, provided it had the option to restart the project should developments in the IASB's project on post-retirement benefits make it necessary or appropriate. With respect to the distinction between defined benefit and defined contribution plans, the IFRIC decided to split the project into two parts. The part dealing with the distinction of defined benefit plans and defined contribution plans should stay in group 4 and be addressed by the IASB. The other part, addressing how to determine the allocation of future salary increases in the measurement of the present value of the defined benefit obligation, should be developed further by the staff and submitted to the Agenda Committee and the IFRIC as a potential agenda item.

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