Accounting and Reporting by Retirement Benefit Plans

Perspective and Issues

IAS 26 sets out the form and content of the general-purpose financial reports of retirement benefit plans. This standard deals with accounting and reporting to all participants of a plan as a group, and not with reports which might be made to individuals about their particular retirement benefits. The standard applies to

• Defined contribution plans where benefits are determined by contributions to the plan together with investment earnings thereon; and

• Defined benefit plans where benefits are determined by a formula based on employees' earnings and/or years of service.

IAS 26 may be compared to IAS 19. The former addresses the financial reporting considerations for the benefit plan itself, as the reporting entity, while the latter deals with employers' accounting for the cost of such benefits as they are earned by the employees. While these standards are thus somewhat related, there will not be any direct interrelationship between amounts reported in benefit plan financial statements and amounts reported under IAS 19 by employers.

IAS 26 became effective for financial statements of retirement benefit plans in 1988. While IAS 19 has been revised twice, IAS 26 was never revised by the IASC. It was, however, reformatted in 1994 to bring it in line with the current IASC practice. There are no current plans to address this topic again.

Sources of IAS

IAS 26