The International Accounting Standards Board (IASB) has confirmed it will not shortlist a project on pensions accounting for inclusion in its 2022 to 2026 workplan.
The decision draws a line under hopes in some quarters that the board would attempt to fix deficiencies in hybrid pension plan accounting under International Accounting Standard 19, Employee Benefits (IAS 19).
IASB member Rika Suzuki said support among stakeholders for the binary classification of pension plans under IAS 19 between defined benefit plans and defined contribution plans, left “not a lot of room to improve the accounting for hybrid pension schemes”.
The IFRS Foundation, the body which oversees the IASB, launched a public consultation on the shape of its future workplan in March 2021. Some 122 constituents responded to the consultation, suggesting about 70 potential projects for the board to work on.
From that feedback, staff drew up a shortlist of seven projects for the board to consider adding to its agenda. The board will review that shortlist during its April meeting round.
Meanwhile, In their assessment of the merits of tackling pensions accounting, staff wrote: “In general, this topic does not seem particularly important to users.
“Most users who commented on this potential project rated it as medium priority. One user rated it as high priority but did not provide a reason.”
Another user who rated it as a high-priority topic raised concerns over divergent accounting practices for the new generation of hybrid pension promises that IAS 19 currently struggles to deal with.
Staff also commented in their meeting paper that any project on pensions accounting might also “interact with a project on discount rates and a project on other comprehensive income”.
The board also agreed with the staff’s recommendation against considering either of these two projects for further discussion at next month’s board meeting.
IASB chair Andreas Barckow said: “The academic in me, like the technical nerd in Mary, would love to see advances in OCI [other comprehensive income]. I must say, because this is a problem that we have created for ourselves.
“So I think our line of argument is not robust enough in the conceptual framework for it to be a guiding frame for the board.”
He also noted the inconsistencies in the board’s approach to discounting across its literature, but noted that concerns over discounting had eased as the threat of negative interest rates had waned.
No comments yet