Ias 19 amends

IASB Amends IAS 19
The Next Phase in the Evolution of
Accounting for Retirement Benefits
July 2011

Executive Overview
In a further step in the evolution of the accounting for retirement benefits, the International Accounting
Standards Board (IASB) has issued its long-awaited amendment to IAS 19, Employee Benefits (IAS 19, rev.
2011). As amended, IAS 19 will require immediate recognition of all changes in the funded position of employers’ retirement plans. It also establishes a new measure of net interest income or cost. The effect of the changes will vary depending on a company’s current accounting policy under IAS 19. The key changes for plan sponsors to consider are:
• Immediate recognition of all noncash changes in funded position — gains and losses arising from experience differing from what was assumed, changes in assumptions, investment gains and losses on plan assets, and the effect of plan changes • Replacement of interest cost and the expected return on plan assets with net interest income/cost on the asset or liability recognised on the balance sheet; this net interest income or cost is measured based on the plan’s discount rate
• Disaggregation of the components of retirement cost into service cost, net interest on the defined benefit asset or liability, and remeasurement effects
(gains/losses, including asset returns differing from the discount rate and changes in the asset ceiling); the remeasurement component is reported in other comprehensive income (OCI), whereas the service cost and net interest income/cost are reported in profit and loss (P&L)

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• Clarification of guidance on measurement issues, such as the treatment of plan administration costs, taxes paid by the plan and the implications of risksharing features of the plan
• Expanded disclosures to provide more insight about the company’s risks associated with the retirement plans, including the timing, amount and uncertainty
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