I - Financial income and charges on Employee Benefits provisions
Content
- R53650 - Expected return on plan assets
- R53640 - Interest costs - pension & other employee benefits / actuarial gains(losses) on other long-term benefits
= Cost of discounting Employee Benefits provisions, i.e. the increase of the carrying amount of long-term provisions to reflect the passage of time (reference: IAS 19, par 48 + 78: see below the excerpts of these paragraphs).
The related provisions are those related to post-employment benefits and termination benefits (recovery plans only).
See also the provisions for employee benefits.
Expected return on plan assets (R53650)
This line item includes entities with defined-benefit plans recognised in accordance with IAS 19 "Employee Benefits", of which the plans are fully or partially covered by eligible insurance policies or funds ("plan assets").
The return on plan assets includes interest, dividends and other revenue from these assets together with realized or unrealized gains or losses relating to these assets, less any costs of administering the plan and less any tax payable by the plan itself.
The expected return on plan assets is calculated by actuaries on December 31, N-1 for year N, based on return assumptions established for this date.
Interest costs - pension & other employee benefits / actuarial gains(losses) on other long-term benefits (R53640)
This account concerns entities with defined-benefit plans accounted for in accordance with IAS 19 "Employee benefits".
It shows the increase during a period in the present value of a defined-benefit obligation resulting from employee service in the current and prior periods.
IAS 19
Post-employment benefits: defined benefit plans
Par 48: Accounting for defined benefit plans is complex because actuarial assumptions are required to measure the obligation and the expense and there is a possibility of actuarial gains and losses. Moreover, the obligations are measured on a discounted basis because they may be settled many years after the employees render the related service.
Actuarial assumptions: discount rate
Par 78: The rate used to discount post-employment benefit obligations (both funded and unfunded) shall be determined by reference to market yields at the end of the reporting period on high quality corporate bonds. In countries where there is no deep market in such bonds, the market yields (at the end of the reporting period) on government bonds shall be used. The currency and term of the corporate bonds or government bonds shall be consistent with the currency and estimated term of the post-employment benefit obligations.