Employee Benefits - Statutory Minimum Funding Requirements And Recognising Defined Benefit Assets

In many countries, including the UK, entities are required to make minimum contributions to post-employment benefit plans for a stated period of time in order to provide greater security for the beneficiaries. However, companies have accounted for these obligations in a number of ways, and now the International Financial Reporting Interpretations Committee (IFRIC) has recently issued clarification.

IAS 19 ‘Employee benefits’ limits the measurement of a defined benefit asset to "the present value of economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan". The interpretation of this paragraph and the possible effect of a minimum funding requirement on the ability to recognise an asset are dealt with in IFRIC 14 ‘IAS 19 The limit on a defined benefit asset, minimum funding requirements and their interaction’. IFRIC 14 also discusses