In its meeting earlier this month, the International Financial Reporting Interpretations Committee discussed a staff draft Interpretation addressing the effect of a statutory minimum funding requirement on the asset ceiling requirement under IAS 19. [IFRIC Update, p.3] Reaffirming its previous deliberations, the IFRIC confirmed that if an entity has a statutory requirement to make plan contributions in excess of the IAS 19 defined benefit obligation and the assets derived from those contributions would not be available to the entity as a reduction in future contributions or refund of surplus, then the funding requirement generates an additional liability under IAS 19.
- By analogy, that analysis might apply to other circumstances. However, the IFRIC decided not to generalize the scope and title of the draft Interpretation.
- In the calculaton of the asset available as a reduction in future contributions, no allowance should be made for future changes in the size and demographics of the entity’s workforce.
Editorial changes were suggested, including recommendation for clearer distinction between funding versus accounting issues. Staff is to prepare a revised draft of the Interpretation for discussion at IFRIC’s next meeting.