Presentation Employee Benifit Online

8/20/2019 Presentation Employee Benifit Online

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EMPLOYEEBENEFITS

(IAS 19)1Employee beneft Management


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1. SCOPE

This Standard sets out

the accounting anddisclosure byemployers or

employee benefts.

2Employee beneft Mnagement


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The Standard identifes !r "ain#ate$ries e"%&'ee eneft

(1)Shrt*ter" e"%&'ee enefts+ s!#h as ,a$es+sa&aries+ -#atina& h&ida' eneft+ si# %a'+ %rftsharin$ r n!s %&ans %aid ,ithin 1/ "nths theend the %erid+ and nn* "netar' enefts+ s!#has "edi#a& #are and s n+ r #!rrent e"%&'ees.

(/)Pste"%&'"ent enefts+ s!#h as %ensins+%ste"%&'"ent "edi#a& enefts+ and %st*e"%&'"ent &ie ins!ran#e.

(0)Ter"inatin enefts+ s!#h as se-eran#e %a'.

()Other &n$*ter" e"%&'ee enefts in#&!din$&n$ ser-i#e &ea-e r saati#a& &ea-e.



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Pste"%&'"entenefts are #ate$ri2ed

as either defned#ntri!tin %&ans rdefned eneft %&ans.



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3EFINITIONS OF 4EY

TE5MS1*M!&tie"%&'er %&an.

Either a defned #ntri!tin r a

defned eneft %&an that %&sthe assets #ntri!ted '-ari!s #"%anies that are nt

!nder #""n #ntr& and !sesthse assets t %r-ide eneftst e"%&'ees "re than ne

entit'. 5Employee beneft Mnagement


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/*Present -a&!e a defnedeneft &i$atin.

The present alue beorededucting any plan assets or any

e!pected payments re"uired tosettle the obligation that hasoccurred as a result o theserice o employees in thecurrent and preious periods.

#Employee beneft Mnagement


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0*C!rrent ser-i#e

#st. The increase in the

present alue o thedefned beneft obligation

that occurs as a result oemployee serice in the

current period.$Employee beneft Mnagement


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*Interest #st.

The increase in the period in thepresent alue o the defnedbeneft obligation that arises

because the benefts payable areone year closer to the settlemento the scheme.

%Employee beneft Mnagement


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7*5et!rn n %&an assets.

The interest& diidends& andany other income that isderied rom the plan assets

together (ith any reali)ed orunreali)ed gains or losses on

those assets less the cost oadministering the plan andany ta! payable by the plan.

1*Employee beneft Mnagement


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8*A#t!aria& $ains and&sses.

E!perience ad+ustments and thee,ects o any changes in actuarial

assumptions. E!periencead+ustments are di,erences bet(eenthe preious actuarial assumptions

and (hat has actually happened.



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*Past ser-i#e #st.

The increased present alue o adefned beneft obligation oremployee serice in preious periods

that has arisen because o theintroduction o changes to thebenefts payable to employees. -ast

serice costs may be positie ornegatie depending on (hether thebenefts are improed or reduced.



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3EFINE3 CONT5IB:TION PLANSAN3 3EFINE3 BENEFIT PLANS

CLASSIFICATION n defned contribution plans& an entity pays

a f!ed contribution into a separate entity/und0 and (ill hae no legal or constructie

obligation to pay urther contributions i theund does not hae sucient assets to payemployee benefts relating to employeeserice in the current and prior periods. n

entity should recogni)e contributions to adefned contribution plan (here anemployee has rendered serice in e!change

or those contributions. 13Employee beneft Mnagement


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ll other postemployment

beneft plans are classifedas defned beneft plans.efned beneft plans can be

ununded& partly unded& or(holly unded.



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3EFINE3 BENEFIT PLANS

S 1' re"uires an entity to account not only or itslegal obligation to defned beneft plans but also orany constructie obligation that arises.

n accounting or defned beneft plans& an entityshould determine the present alue o any defnedbeneft obligation and the air alue o any planassets (ith such regularity that the amount sho(n inthe fnancial statements does not di,er materially

rom the amounts that (ould be deter mined at thebalance sheet date.

efned beneft plans should use the pro+ected unit

credit method to measure their obligations and costs.15Employee beneft Mnagement


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3EFINE3 CONT5IB:TION

PLANS nder a defned contribution plan&payments or benefts proided toemployees may be simply a

distribution o total und assets or athird party6or e!ample& aninsurance entity6may assume the

obligation to proide the agreed leelo payments or benefts to theemployees. The employer is notre"uired to ma7e up any shortall in

the und8s assets. 1#Employee beneft Mnagement


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CONT5ASTIN; 3EFINE3BENEFIT AN3 3EFINE3

CONT5IB:TION :nder the defned enefts s#he"e+ the enefts%a'a&e t the e"%&'ees are nt ased s&e&' n thea"!nt the #ntri!tins+ as in a defned#ntri!tin s#he"e< rather+ the' are deter"ined 'the ter"s the defned eneft %&an.

This means that the ris7s remain (ith the employer& and theemployer8s obligation is to pro ide the agreed amount obenefts to current and ormer employees. The beneftsnormally are based on such actors as age& length o serice&

and compensation.

The employer retains the inestment and actual ris7s o theplan. The accounting or defned beneft plans is morecomple! than defned contributions plans.

1$Employee beneft Mnagement


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Case St!d' 1 Facts

According to the pension plan of an entity, theemployees and entity contribute 5% of theemployee’s salary to the plan, and the employee is

guaranteed a return of the contributions plus 3% ayear by the employer.

Required What classication !ould be gi"en to theabo"e pension scheme#

1%Employee beneft Mnagement


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ACCO:NTIN; FO5 3EFINE3CONT5IB:TION SC=EMES

The accounting or a defned contribution scheme is airlysimple because the employer8s obligation or each periodis determined by the amount that had to be contributed tothe scheme or that period.

9ontributions can be based on a ormula that usesemployee compensation as the basis or its calculation.

There are no actuarial assumptions re"uired to measurethe obligation or e!pense& and there are no actuarial gains

or losses. The employer recogni)es the contribution payable at the

end o each period based on employee serice during thatperiod. This amount is reduced by any payments made toemployees in the period.

1'Employee beneft Mnagement


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ACCO:NTIN; FO5 3EFINE3 CONT5IB:TIONSC=EMES

the employer has madepayments in e!cess o the

re"uired amount& this e!cess istreated as a prepayment to thee!tent that the e!cess (ill lead

to reduction in uturecontributions or reund o cash.

2*Employee beneft Mnagement


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ACCO:NTIN; FO5 3EFINE3BENEFIT PLANS

The obligation o an employer under a defnedbeneft plan is to proide an agreed amount obenefts to current and ormer employees in theuture. :enefts may be in the orm o cash

payments or could be in7ind in terms omedical or other benefts.

;ormally benefts (ill be based on age& lengtho serice& and (age and salary leels. -ensionsand other longterm benefts plans are basicallymeasured in the same (ay. ctuarial gains andlosses o longterm benefts plans other thanpensions are reported immediately in net

income. 21Employee beneft Mnagement


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9ontinue


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9ontinue


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4EY INFO5MATION3EFINE3 BENEFIT PLANS

The entity must determine certain 7ey inormation or eachmaterial employee beneft plan.

This inormation is re"uired?

reliable estimate is re"uired o the amount o the beneftthat the employees hae earned in the current and priorperiod or serice rendered.

That beneft must be discounted using the pro+ected unit

credit method in order to determine the present alue o thedefned beneft obligation and the current serice cost.

The air alue o any plan assets should be determined.


The total amount o actuarial gains and losses and the


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The total amount o actuarial gains and losses and theamount o those actuarial gains and losses that are to berecogni)ed must be calculated.

The past serice costs should be determined in cases in(hich there has been a change or an introduction o a plan.

The resulting gain or loss should be calculated in cases in(hich a plan has been curtailed& changed& or settled.

The entity must account not only or its legal obligation butalso or any constructie obligation that arises rom any

inormal practices. @or e!ample& the situation could arise(herein the entity has no realistic alternatie but to payemployee benefts een though the ormal terms o a defned beneft plan may permit an entity to terminate itsobligation under the plan.



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Case St!d' /

@acts

director o an entity receies a retirement beneft o 1*Ao his fnal salary per annum or his contractual period othree years. The director does not contribute to the scheme.

=is anticipated salary oer the three years is Bear 1C1**&***& Bear 2 C12*&***& and Bear 3 C144&***. ssume adiscount rate o 5A.

Required

$alculate the current ser"ice cost, the pensionliability, and the interest cost for the three years.olution

2#Employee beneft Mnagement

Presentation Employee Benifit Online

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