Proposed Amendments to IAS 19

The IASB on 25 March 2013 issued an exposure draft (ED) intended to clarify the application of IAS 19, ‘Employee Benefits’ (2011), to plans that require employees or third parties to contribute towards the cost of benefits.

The amendments are in light of the concerns related to the accounting for contributions from employees and third parties to defined benefit plans. The objective of the proposed amendments is to provide a more straight-forward alternative for this accounting when the contributions payable in a particular period are linked solely to the employee’s service rendered in that period.  The proposed guidance would be applicable, for example, to accounting for employee contributions that are calculated according to a fixed percentage of salary.

Some pension plans require employees or third parties to make contributions to the plan. These contributions reduce the cost to the employer of providing the benefits; common practice under the previous version of IAS 19 was to deduct the contributions from the cost of benefits earned in the year in which they were paid.

This ED proposes that contributions that are linked exclusively to employee service in the period in which they are paid may be applied to reduce the cost of benefits earned in that period.

The proposed amendment would allow (but not require) many entities to continue accounting for employee contributions using their existing accounting policy.

Does it affect me?

The proposals will affect any post-employment benefit plans where the rules of the plan require employees or third parties to meet some of the costs of the plan.

Members affected by these proposals (as preparers’ or users of financial statements) should consider whether the proposals will simplify the guidance in IAS 19 (2011) and provide the Institute with their views.

Comments on the Exposure Draft and the Basis for Conclusions need to be received by 30 June 2013 and should be submitted in writing to

The full document is available via the download below.


Leave a Reply

Your email address will not be published. Required fields are marked *