7.2 Accounting for pensions and other post-employment benefits
4 min read•august 16, 2024
Pensions and other post-employment benefits are crucial parts of employee compensation packages. Companies must carefully account for these long-term obligations, balancing current costs with future commitments. This section dives into the complex world of pension accounting, exploring key concepts and calculations.
Understanding pension accounting is essential for grasping a company's financial health. We'll look at how businesses calculate and report pension expenses, obligations, and funded status. These factors significantly impact financial statements and can reveal important insights about a company's future liabilities.
Accounting for Pensions
Regulatory Framework and Principles
Top images from around the web for Regulatory Framework and Principles
Topic 5: The Constraints on the Pension System – Pension Finance and Management View original
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Topic 1: Governance of Pension Plans – Pension Finance and Management View original
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Topic 1: Introduction – Pension Finance and Management View original
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Topic 5: The Constraints on the Pension System – Pension Finance and Management View original
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Topic 1: Governance of Pension Plans – Pension Finance and Management View original
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Top images from around the web for Regulatory Framework and Principles
Topic 5: The Constraints on the Pension System – Pension Finance and Management View original
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Topic 1: Governance of Pension Plans – Pension Finance and Management View original
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Topic 1: Introduction – Pension Finance and Management View original
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Topic 5: The Constraints on the Pension System – Pension Finance and Management View original
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Topic 1: Governance of Pension Plans – Pension Finance and Management View original
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International Accounting Standard (IAS) 19 and Accounting Standards Codification (ASC) 715 govern pension and other post-employment benefit accounting
Fundamental principle recognizes employee benefit costs over the service period rather than at payment
Two main types of pension plans
Defined contribution plans (employer contributes a set amount)
Defined benefit plans (employer promises a specific benefit amount)
Other post-employment benefits (OPEB) include health care and life insurance for retirees
Projected unit credit method calculates pension obligations under IFRS and U.S. GAAP
Disclosure requirements encompass
Plan nature
Significant assumptions
Reconciliations of plan assets and obligations balances