CERTYNEX IFRS ACADEMY

Rovane SA has taken out a group insurance policy that funds its employees' pensions. The policy covers only pensions already earned; Rovane has committed to employees to pay itself any pension the insurer would not cover (case facts). Which analysis is consistent with the treatment of insured benefits?

The plan is a defined contribution plan from the moment the policy is taken out, because the employees' longevity risk is transferred to the insurer.

Taking out the policy is not enough to classify the plan as defined contribution: Rovane keeps a commitment to employees, to be examined from the terms of the plan.

The insurance premiums are expensed when paid, and there is no other treatment to examine for Rovane's plan.

The classification depends on the insurer: if the insurer is known to be solvent, the plan is defined contribution and Rovane can stop examining it, whatever the content of the contract.