IASB Proposes Improvements to Defined Benefit Pensions Accounting
The International Accounting Standards Board (IASB) has published for public comment an exposure draft of proposed amendments to IAS 19 Employee Benefits.
The proposals would amend the accounting for defined benefit plans through which some employers provide long-term employee benefits, such as pensions and post-employment medical care. In defined benefit plans, employers bear the risk of increases in costs and of possible poor investment performance.
The amendments would address deficiencies in IAS 19 by requiring entities:
The proposals have been developed following a rigorous and comprehensive due process. A discussion paper ‘Preliminary Views on Amendments to IAS 19’ was published for public comment in 2008 with 150 comment letters received. The board then met on 13 occasions to consider the responses and further refine the proposals, seeking input from a broad range of interested parties (including the IASB’s Employee Benefits Working Group). The board and staff will undertake further outreach during the comment period to ensure that the views of all interested parties are taken in to consideration.
Sir David Tweedie, chairman of the IASB, said: “IAS 19 was inherited from our predecessor body and an overhaul of pensions accounting is long overdue. The proposals, if adopted, will significantly improve the transparency and comparability of pension obligations. We now seek input from interested parties in order to refine the proposals further, with the aim of publishing a final standard in 2011.”