1IAS 26 Retirement benefit plans
IAS 26 ACCOUNTING AND REPORTING
BY RETIREMENT BENEFIT PLANS
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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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IAS 26 Retirement benefit plans 3
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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IAS 26 Retirement benefit plans 4
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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IAS 26 Retirement benefit plans 5
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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IAS 26 Retirement benefit plans 6
DEFINED CONTRIBUTION PLANSContribu-tions
paid
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IAS 26 Retirement benefit plans 7
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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IAS 26 Retirement benefit plans 8
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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IAS 26 Retirement benefit plans 9
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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IAS 26 Retirement benefit plans 10
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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IAS 26 Retirement benefit plans 11
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
IAS 26 Retirement benefit plans 12
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
IAS 26 Retirement benefit plans 13
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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IAS 26 Retirement benefit plans 14
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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IAS 26 Retirement benefit plans 15
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
IAS 26 Retirement benefit plans 16
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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