slide: IAS 19 Employee Benefits
IAS 19 Employee Benefits_External Users
Terms
Actuarial gains and losses
Changes in the present value of the defined benefit obligation resulting from:
(a) Experience adjustments (the effects of differences between the previous actuarial assumptions and what has actually occurred); and
(b) The effects of changes in actuarial assumptions.
Asset ceiling
The present value of any economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan.
Assets held by a long-term employee benefit fund
Assets (other than non-transferable financial instruments issued by the reporting entity) that:
(a) Are held by an entity (a fund) that is legally separate from the reporting entity and exists solely to pay or fund employee benefits; and
(b) Are available to be used only to pay or fund employee benefits, are not available to the reporting entity’s own creditors (even in bankruptcy), and cannot be returned to the reporting entity, unless either:
(i) The remaining assets of the fund are sufficient to meet all the related employee benefit obligations of the plan or the reporting entity; or
(ii) The assets are returned to the reporting entity to reimburse it for employee benefits already paid.
Current service cost
The increase in the present value of the defined benefit obligation resulting from employee service in the current period.
Defined benefit plans
Post-employment benefit plans other than defined contribution plans.
Defined contribution plans
Post-employment benefit plans under which an entity pays fixed contributions into a separate entity (a fund) and will have no legal or constructive obligation to pay further contributions if the fund does not hold sufficient assets to pay all employee benefits relating to employee service in the current and prior periods.
Employee benefits
All forms of consideration given by an entity in exchange for service rendered by employees or for the termination of employment.
Fair value
The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
Multi-employer plans
Defined contribution plans (other than state plans) or defined benefit plans (other than state plans) that:
(a) Pool the assets contributed by various entities that are not under common control; and
(b) Use those assets to provide benefits to employees of more than one entity, on the basis that contribution and benefit levels are determined without regard to the identity of the entity that employs the employees.
Net defined benefit liability (asset)
The deficit or surplus, adjusted for any effect of limiting a net defined benefit asset to the asset ceiling.
Net interest on the net defined benefit liability (asset)
The change during the period in the net defined benefit liability (asset) that arises from the passage of time.
Other long-term employee benefits
All employee benefits other than short-term employee benefits, post-employment benefits, and termination benefits.
Past service cost
The change in the present value of the defined benefit obligation for employee service in prior periods, resulting from a plan amendment (the introduction or withdrawal of, or changes to, a defined benefit plan) or a curtailment (a significant reduction by the entity in the number of employees covered by a plan).
Plan assets
Comprises (a) Assets held by a long-term employee benefit fund; and (b) Qualifying insurance policies.
Post-employment benefit
Employee benefits (other than termination benefits and short-term employee benefits) that are payable after the completion of employment.
Post-employment benefit plans
Formal or informal arrangements under which an entity provides post-employment benefits for one or more employee.
Present value of a defined benefit obligation
The present value, without deducting any plan assets, of expected future payments required to settle the obligation resulting from employee service in the current and prior periods.
Projected Unit Credit Method
An actuarial valuation method that sees each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation (sometimes known as the accrued benefit method pro-rated on service or the benefit/years of service method).
Qualifying insurance policy
An insurance policy issued by an insurer that is not a related party (as defined in IAS 24 Related Party Disclosures) of the reporting entity, if the proceeds of the policy:
(a) Can be used only to pay or fund employee benefits under a defined benefit plan; and
(b) Are not available to the reporting entity’s own creditors (even in bankruptcy) and cannot be paid to the reporting entity, unless either:
(i) The proceeds represent surplus assets that are not needed for the policy to meet all the related employee benefit obligations; or
(ii) The proceeds are returned to the reporting entity to reimburse it for employee benefits already paid.
Remeasurements of the net defined benefit liability (asset)
These comprise:
(a) Actuarial gains and losses;
(b) The return on plan assets, excluding amounts included in net interest on the net defined benefit liability (asset); and
(c) Any change in the effect of the asset ceiling, excluding amounts included in net interest on the net defined benefit liability (asset).
Return on plan assets
Interest, dividends and other income derived from the plan assets, together with realised and unrealised gains or losses on the plan assets, less:
(a) Any costs of managing plan assets; and
(b) Any tax payable by the plan itself, other than tax included in the actuarial assumptions used to measure the present value of the defined benefit obligation.
Settlement
A transaction that eliminates all further legal or constructive obligations for part or all of the benefits provided under a defined benefit plan, other than a payment of benefits to, or on behalf of, employees that is set out in the terms of the plan and included in the actuarial assumptions.
Short-term employee benefits
Employee benefits (other than termination benefits) that are expected to be settled wholly before 12 months after the end of the annual reporting period in which the employees render the related service.
Termination benefits
Employee benefits provided in exchange for the termination of an employee’s employment as a result of either:
(a) An entity’s decision to terminate an employee’s employment before the normal retirement date; or
(b) An employee’s decision to accept an offer of benefits in exchange for the termination of employment.
Vested employee benefits
Employee benefits that are not conditional on future employment.
Here are some useful links and documents:
Benefit_A
Benefits_details
Catalina's_file_notes
Edge_group
Four_plans
Information
Lantau_group
Net_defined_benefit_liability
Remeasurements_calculation
Staff_memo