19-Pensions - Chapter 19...

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    Chapter 19 Chapter 19                       Pensions and Other Employee Future Benefits Pensions and Other Employee Future Benefits No crying!
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2 Pensions and Other Employee  Pensions and Other Employee  Future Benefits Future Benefits Introduction Introduction and Benefit and Benefit Plan Basics Plan Basics •Introduction •Defined contribution plans •Defined benefit plans •Nature of pension plans Presentation, Presentation, Disclosure, and Disclosure, and Analysis Analysis •Presentation •Disclosures Illustration •Analysis Defined Benefit Defined Benefit Pension Plans Pension Plans The employer’s obligation •Plan assets •Funded status Benefit cost components •Immediate recognition approach •Deferral and amortization approach •Other considerations Comparison of results •Other defined benefit plans IFRS / Private IFRS / Private Enterprise Enterprise GAAP GAAP Comparison Comparison Comparison of IFRS and private enterprise GAAP •Looking ahead
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3 Benefit Plans Benefit Plans Three examples of benefit plans: 1. Pension and other post-retirement plans (e.g. health care and life insurance) 2. Post-employment benefit plans (e.g. severance benefits and long-term disability benefits) 3. Compensated absences (e.g. parental leaves, unrestricted sabbatical leaves)
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4 Benefit Plans Benefit Plans Employee future-benefit plans can be: 1. Defined contribution (DC) plans Specifies the contributions or payments into the plan Does not specify the benefits the employees will receive or method used to determine benefits 1. Defined benefit (DB) plans These are any benefit plans that are not a defined contribution plan Further subdivided as: a. Benefits that vest or accumulate b. Benefits that do not vest or accumulate
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5 Benefit Plans Benefit Plans Employee future-benefit plans can be: 1. Defined contribution plans 1. Defined benefit plans $ now $ Later ? Later ? now
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6 Pension Plans Pension Plans A pension plan provides benefits (payments) to retirees for services provided during employment Employer sponsors and contributes to fund, and incurs the cost of the pension plan Accounting for the employer Pension plan receives the contributions, administers pension assets, and makes pension payments to the beneficiaries Accounting for the pension plan
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7 Pension Fund Stream  Pension Fund Stream  COMPANY Pension Expense Cash paid to pension plan (funding) Accrued pension asset/liability $ $ TRUST Plan Assets Retirees (pension benefits)
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8 Contributory Employee and employer make contributions to the plan Non-contributory Employers bear the full cost of the pension plan No contributions made by employee Vested Amounts in the plan become the legal property of the employee Employee is entitled to receive benefits even after leaving the employ of the corporation Governed by provincial law Pension Terminology Pension Terminology
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This note was uploaded on 10/26/2011 for the course ACCT 3410 taught by Professor Jobs during the Spring '11 term at Kwantlen Polytechnic University.

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19-Pensions - Chapter 19...

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