Multi-employer plans

Learning objectives

• Explain the accounting for a multi-employer defined benefit plan depending on the availability of information.L2
• Analyse, from the facts of a case, the accounting for participation in a multi-employer plan.L3

Normative references

• IAS 19 §32A multi-employer plan is classified as a defined contribution plan or a defined benefit plan under its terms, including any constructive obligation that goes beyond them; if it is a defined benefit plan, the entity accounts for its proportionate share of the obligation, plan assets and cost (para. 33) or, if sufficient information is not available, accounts for it as a defined contribution plan (para. 34).

Original summaries of the paragraphs (reference register), never a quotation of the standard.

4 questions

• Sablet SA takes part in an industry-wide multi-employer plan that promises defined benefits to the employees of several companies. The plan administrator does not give Sablet the information needed to determine its share of the obligation, the assets and the cost (case facts). Which treatment is consistent in Sablet's accounts?L2
• Tarnel SA takes part in two multi-employer plans that promise defined benefits based on final salary. North plan: the administrator sends Tarnel each year its share of the obligation, the assets and the cost, prepared on a consistent and reliable basis. South plan: the administrator provides only the amount of contributions due (case facts). Write a note that determines the treatment of each plan and highlights what is a matter of professional judgement.L3
• A trainee must account for the contributions that Verane SA pays to the national retirement insurance plan, run by the State. Which approach is consistent with the place the standard gives to state plans?L2
• 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?L2