Minimum funding (IFRIC 14)

Learning objectives

• Calculate the reduction in the economic benefit available caused by minimum contributions exceeding future service cost, floored at zero.L3
• Assess whether a minimum funding requirement gives rise to an additional liability.L4

Normative references

The syntheses of the reference register are written in French: only the paragraph reference is shown here.

2 questions

• The plan of Corlan SA is in surplus by {surplus}. Corlan has an unconditional right to a refund whose present value is {refund_pv}. For future services, the present value of future service costs under IAS 19 is {pv_service_cost} and that of the minimum funding contributions required for those same future services is {pv_min_funding}. Additional contributions of {catch_up} (present value) cover an existing minimum funding shortfall in respect of services already rendered; once paid, they will remain available to Corlan as a refund (case data). Calculate the excess of the minimum funding contributions for future services over the future service cost, the benefit available as a reduction in future contributions (floor at zero) and the net asset to recognise.L4
• The plan of Devane SA is subject to a minimum funding requirement of 150,000 per year: 90,000 for future services, and 60,000 to clear an existing minimum funding shortfall in respect of services already rendered. The annual future service cost under IAS 19 is 100,000 (case data). Which conclusion on the benefit available as a reduction in future contributions is correct?L3