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IAS 19 Amendments - Defined Benefit Plans: Employee Contributions


In 2012, the IFRS Interpretations Committee received two submissions relating to IAS 19 revised in 2011 ('IAS 19 (2011)'). The submissions asked for clarification of paragraph 93 of IAS 19 (2011) and raised concerns about the complexity of applying certain requirements of paragraph 93 to simple contributory plans. More specifically, concerns were raised relating to the accounting for contributions from employees and third parties to defined benefit plans, and the requirement to attribute those contributions to the periods of service.

In March 2013, in response to those submissions, the IASB issued the Exposure Draft ED/2013/4 Defined Benefit Plans: Employee Contributions ('the ED'). The IASB in the ED clarified the guidance in paragraph 93 and proposed a practical expedient to address complexity issues. Enities would be allowed to allocate contributions, that are linked solely to the employee's service rendered in the period in which they are payable, to that period.

EFRAG issued its draft comment letter on the ED on 29 April 2013, and its final comment letter on 17 July 2013. EFRAG agreed with the IASB's proposals on the basis that they provide relief to preparers on accounting for contributions from employees or third parties in defined benefit plans.

On 21 November 2013, the IASB published the limited scope amendments to IAS 19, entitled Defined Benefit Plans: Employee Contributions ('the Amendment').

In December 2013, EFRAG issued an invitation to comment relating to the endorsement of the Amendment for use in the European Union and European Economic Area. EFRAG was consulting both on its assessment of the Amendment against the technical criteria for the endorsement in the EU and on its initial assessment of the costs and benefits that would arise from its implementation and application in the EU. EFRAG's initial assessment was that the Amendment satisfied the technical criteria for EU endorsement and EFRAG should therefore recommend its endorsement. Comments were requested by 17 January 2014.

On 30 January 2014, EFRAG issued its Endorsement Advice and Effects Study Report relating to the endorsement for use in the European Union and European Economic Area.

EFRAG supported the adoption of the Amendment and recommended its endorsement. EFRAG's recommendation was explained in the letter to the European Commission and the accompanying Basis for Conclusions and the Effects Study Report on the costs and benefits of implementing the Amendment.

The Amendment was endorsed on 17 December 2014 and was published in the Official Journal of the European Union on 9 January 2015.

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