Download - IAS 26 Retirement Benefit Plans

1IAS 26 Retirement benefit plans

IAS 26 ACCOUNTING AND REPORTING

BY RETIREMENT BENEFIT PLANS

9/29/2009

IAS 26 Retirement benefit plans 2

SCOPEINCLUDES EXCLUDES

Reports to participants as a group

Pension schemes, superannuation schemes, retirement benefit schemes, defined contribution plans, defined benefit plans

Separate entity from employers

Separate funds managed by trustees

Group funds managed by insurance companies

Reports about retirement benefit rights of individual participants

IAS 19 cost of retirement benefits in FS of employers

Insurance policies of individuals paid for by the employer

Other employment benefits

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DEFINITIONSRetirement benefit plans •Arrangement to provide benefits to employees on or after termination of service

•Benefits or contributions determined in advance by entity practice

Defined contribution plans •Benefits determined by contributions and investment earnings thereon

Defined benefit plans •Benefits determined by formula based on earnings or years of service

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DEFINITIONSFunding •Transfer of assets to separate entity (fund) for future payment of benefits

Participants •Members and others entitled to benefits of the plan

Net assets available for benefits •Assets less liabilities of the plan, excluding actuarial present value of promised retirement benefits (liability)

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DEFINITIONSActuarial PV of

promised benefits •PV of expected payments to existing and past employees for services already rendered

Vested benefits •Rights to benefits not conditional on continued employment

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DEFINED CONTRIBUTION PLANSContribu-tions

paid

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DEFINED CONTRIBUTION PLANS

Describe activities and effect of changes to plan, membership and terms and conditions

Statements of transactions, investment performance for the period and financial position at end of period

Investment policies

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DEFINED BENEFIT PLANS

Statement

•Net assets available for benefits•Actuarial present value of promised vested and non-vested retirement benefits•Resulting excess or deficit•Use most recent actuarial valuation and disclose date of valuation

Alternatively, a

note may include

•PV of promised vested and non-vested retirement benefits, or•Reference to accompanying actuarial report with containing PV

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DEFINED BENEFIT PLANS PV of promised retirement benefits

• For services rendered to date• Use either current or projected salary levels• Disclose the basis used• Disclose the effect of major change in

actuarial assumptions• Explain the relationship between

Actuarial PV of promised retirement benefits Net assets available for benefits Policy for funding of promised benefits

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DEFINED BENEFIT PLANS

Describe activitiesEffects of changes

to plan & membership terms

& conditions

Statement of transactions &

investment performance during

periodStatement of financial

position at end of period

Actuarial performance as

part of statements or in separate

reportInvestment policies

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Actuarial present value of promised retirement benefits

CURRENT SALARY APPROACH

PROJECTED SALARY APPROACH

Report obligation for benefits earned to date of FSFewer assumptions involved in calculating amounts attributable to each participant

Obligation to pay benefits increases when salaries increasePV closely related to payments on termination or discontinuance of the plan

Report obligation on a going concern basis •Same basis as fundingFinal pay plans: benefits linked to retirement salary levels

Prevents reporting overfunding of plan

Explain context of planned adequacy of future funding clearly9/29/2009


Valuation of plan assets Retirement benefit plan investments

shall be carried at fair value. • Marketable securities: fair value = market value• Where estimate of fair value not possible,

disclose reason• Fixed redemption value assuming a constant

rate of return to maturity• If carried at another more appropriate value,

disclose fair value• Account for fund assets according to other

standards9/29/2009


Disclosure Statement of changes in net assets available for benefits

• Employer contributions• Employee contributions• Investment income• Other income• Benefits paid or payable• Administrative expenses• Other expenses• Taxes on income• Profits and losses on disposal of investments• Changes in value of investments• Transfers to and from other plans

Statement of net assets available for benefits• Assets at end of period• Basis of valuation• Investment > 5% of net assets available for benefits or 5% of any class or type of

security• Details of investment in the employer• Other liabilities

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Disclosure Summary of significant accounting policies Description of the plan and effect of

changes during the period Description of funding policy Defined benefit plans

• Actuarial PV of promised retirement benefits Vested benefits and non-vested benefits Current salary levels or projected salary levels on

benefits promised for service rendered to date• Method used to calculate PV• Description of significant actuarial assumptions

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Disclosure Trustees report

• Names of employers and employee groups• Number of participants receiving benefits• Number of other participants under appropriate

classification• Defined benefit or defined contribution plan• Note if participants contribute to the plan• Description of retirement benefits promised• Termination terms• Any changes to above in the period• Reference to other documents readily available to

users 9/29/2009


Summary Retirement benefit plans must report on financial

performance and position Actuarial valuation is obtained at least every 3

years Actuarial present value of promised retirement

benefits presented in a statement Financial position of assets and obligations

presented in a separate statement Trustees report and notes describe contribution,

membership, participants, terms and conditions, basis for reporting benefits and obligations

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