Exposure Draft
Defined Benefit Plans: Employee Contributions
(Amendments to Ind AS 19)
(Last date for Comments: March 25, 2014)
Issued by
Accounting Standards Board
The Institute of Chartered Accountants of India
Exposure Draft
Defined Benefit Plans: Employee Contributions
(Amendments to Ind AS 19)
Following is the Exposure Draft of Defined Benefit Plans: Employee Contributions
(Amendments to Ind AS 19) issued by the Accounting Standards Board of The Institute of
Chartered Accountants of India, for comments. The Board invites comments on any specific
aspect of the Exposure Draft. Comments are most helpful if they indicate the specific
paragraph or group of paragraphs to which they relate, contain a clear rationale and, where
applicable, provide a suggestion for alternative wording.
Comments should be submitted in writing to the Secretary, Accounting Standards Board, The
Institute of Chartered Accountants of India, ICAI Bhawan, Post Box No. 7100, Indraprastha
Marg, New Delhi 110 002, so as to be received not later than March 25, 2014. Comments
can also be sent by email to commentsasb@icai.in or asb@icai.in.
(This Exposure Draft of the Indian Accounting Standard includes paragraphs set in bold type
and plain type, which have equal authority. Paragraphs in bold type indicate the main
principles. This Exposure Draft of the Indian Accounting Standard should be read in the
context of its objective and the Preface to the Statements of Accounting Standards1)
Paragraphs 9394 are amended. New text is underlined and deleted text is struck through.
Paragraph 92 is included for reference only
Actuarial assumptions: salaries, benefits and medical costs
...
92 Some defined benefit plans require employees or third parties to contribute to the cost
of the plan. Contributions by employees reduce the cost of the benefits to the entity. An
entity considers whether third-party contributions reduce the cost of the benefits to the
entity, or are a reimbursement right as described in paragraph 116. Contributions by
employees or third parties are either set out in the formal terms of the plan (or arise
from a constructive obligation that goes beyond those terms), or are discretionary.
Discretionary contributions by employees or third parties reduce service cost upon
payment of these contributions to the plan.
93 Contributions from employees or third parties set out in the formal terms of the plan
either reduce service cost (if they are linked to service), or reduce affect
remeasurements of the net defined benefit liability (asset) (if they are not linked to
service). An example of contributions that are not linked to service is when (eg if the
contributions are required to reduce a deficit arising from losses on plan assets or from
actuarial losses). If cContributions from employees or third parties are linked to in
1
Attention is specifically drawn to paragraph 4.3 of the Preface, according to which accounting
standards are intended to apply only to items which are material.
respect of service, those contributions reduce the service cost as follows: are attributed
to periods of service as a negative benefit in accordance with paragraph 70 (ie the net
benefit is attributed in accordance with that paragraph).
(a) if the amount of the contributions is dependent on the number of years of service,
an entity shall attribute the contributions to periods of service using the same
attribution method required by paragraph 70 for the gross benefit (ie either using
the plan's contribution formula or on a straight-line basis); or
(b) if the amount of the contributions is independent of the number of years of service,
the entity is permitted to recognise such contributions as a reduction of the service
cost in the period in which the related service is rendered. Examples of
contributions that are independent of the number of years of service include those
that are a fixed percentage of the employee's salary, a fixed amount throughout the
service period or dependent on the employee's age.
Paragraph A1 provides related application guidance.
94 For contributions from employees or third parties that are attributed to periods of service
in accordance with paragraph 93(a), cChanges in employee or third-party the
contributions in respect of service result in:
(a) current and past service cost (if those changes in employee contributions are not
set out in the formal terms of a plan and do not arise from a constructive
obligation); or
(b) actuarial gains and losses (if those changes in employee contributions are set out
in the formal terms of a plan, or arise from a constructive obligation).
...
Amendments to the Appendices of
Ind AS 19 Employee Benefits
Appendix A1 is added.
Appendix A1
Application Guidance
This appendix is an integral part of the Ind AS. It describes the application of paragraphs
92 93 and has the same authority as the other parts of the Ind AS.
A1 The accounting requirements for contributions from employees or third parties are
illustrated in the diagram below.
Contributions from employees or third parties
Set out in the formal terms of the plan (or arise from a
constructive obligation that goes beyond those terms) Discretionary
Not linked to
Linked to service service (for
example, reduce a
deficit)
Dependent on Independent of
the number of the number of
years of service years of service
(1)
Reduce service
Reduce service Affect Reduce service
cost by being cost in the period
in which the remeasurements cost upon
attributed to (paragraph 93) payment to
periods of service related service
is rendered the plan
(paragraph 93(a)) (paragraph 92)
(paragraph 93(b))
(1) This dotted arrow means that an entity is permitted to choose either accounting.
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