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CCH® PENSION — 11/24/10

IASB reaches decisions on DB accounting proposals effective in 2013

The International Accounting Standards Board (IASB) and the Financial Accounting Standards Board (FASB) have come to some tentative agreements following a review on October 19-22, 2010, of comments received on an exposure draft of proposed amendments to its IAS 19 Employee Benefits that would become effective January 1, 2013. Comments on the exposure draft were due to the IASB by September 6, 2010 (see CCH Pension Plan Guide Newsletter, Report No. 1836, May 10, 2010).

The changes to IAS 19 would require entities to: (1) immediately account for all estimated changes in the cost of providing benefits; (2) immediately account for all changes in the value of plan assets; (3) use a new presentation approach that would clearly distinguish between different components of the cost of benefits; and (4) disclose clearer information about the risks arising from defined benefit plans.

The exposure draft does not address contribution-based plans. The IASB notes that it will consider whether or not to further its proposals about such plans after it completes the current project. After discussing the comment letters received on the exposure draft and proposals relating to recognition and disaggregation, the IASB tentatively confirmed the following proposals in the exposure draft:

The IASB also confirmed a previous tentative decision to include in the definition of termination benefits only benefits provided in exchange for termination of employment. During its November meeting, the IASB plans to discuss the presentation of the service cost, finance cost and remeasurement components; disclosures for defined benefit plans; classification of employee benefits; and accounting for settlements and curtailments. The IASB expects to issue a final standard in 2011.

For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer's Benefits Reports.

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