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Accounting Standards for Pension Plans

2023 Annual Improvements

Summary

The AcSB has adopted an annual improvements process that will amend accounting standards for pension plans to clarify guidance and correct wording for unintended consequences, conflicts, or oversights. Major improvements to the standards, such as the issuance of a new standard, are not included in the annual improvements process.

In December 2022, the AcSB amended Section 4600, Pension Plans to introduce new measurement and disclosure guidance for guaranteed annuity contracts, commonly referred to as “buy-in” annuity contracts. Through its annual improvements process, the AcSB is exploring providing relief from certain existing disclosure requirements that may become less relevant as a result of the new guidance. This would affect pension plans applying the standards in Part IV of the CPA Canada Handbook – Accounting, as relevant.

Staff Contact(s)

Shalini Gupta, CPA, CA Principal, Accounting Standards Board

Phone number  +1 647 956 6628
Email address  [email protected]

Project Status

  • Information gathering

    Completed in early 2023

  • Approving project

    The AcSB approved the project at its March 8-9, 2023 meeting

  • Consulting stakeholders

    The AcSB issued its Exposure Draft – 2023 Annual Improvements to Accounting Standards for Pension Plans in May 2023

  • Deliberating feedback

    The AcSB deliberated feedback received

    Learn more
  • Final pronouncement

    Final amendments issued in the CPA Canada Handbook – Accounting on November 1, 2023

News

May 3, 2023

News, Document for Comment

AcSB Exposure Draft – 2023 Annual Improvements to Accounting Standards for Pension Plans

The AcSB issued an Exposure Draft proposing annual improvements to accounting standards for pension plans. These improvements relate to disclosures for guaranteed annuity contracts, commonly referred to as “buy-in” annuity contracts. We encourage you to submit your comments by June 2, 2023.

Meeting & event summaries

May 5, 2023

AcSB Decision Summary – April 25, 2023

The AcSB discussed feedback from its Pension Plan Working Group on disclosures for buy-in annuity contracts under Section 4600, Pension Plans. In December 2022, Section 4600 was amended to introduce new guidance specific to buy-in annuity contracts. Those amendments require buy-in annuity contracts to be measured at a value equal to the related benefit obligation instead of at fair value.

However, the fair value disclosure requirements from IFRS 7 Financial Instruments: Disclosures and the Appendix to Section 4600 were still required. The AcSB considered feedback from its Pension Plan Working Group that these disclosures may become less useful for buy-in annuity contracts once the December 2022 amendments take effect. The Board agreed with this feedback.

Therefore, as part of its 2023 annual improvements process, the AcSB plans to issue an exposure draft to scope out buy-in annuity contracts from the fair value disclosure requirements. The Board tentatively decided to propose an effective date of January 1, 2024, to align with the effective date of the December 2022 amendments. Earlier application would be permitted. The Board reviewed a draft of the exposure draft at the meeting and gave permission to begin the balloting process. It expects to issue the exposure draft in early May 2023 with a 30-day comment period.

 

April 25, 2023

AcSB Decision Summary – March 8-9, 2023

The AcSB also discussed disclosures for buy-in annuity contracts. In December 2022, Section 4600 was amended to introduce new measurement and disclosure guidance specific to buy-in annuity contracts. Those amendments are effective for fiscal years beginning on or after January 1, 2024, with earlier application permitted. Following the amendments, buy-in annuity contracts would no longer be measured at fair value, but rather at a value equal to the related benefit obligation adjusted for amounts receivable under the annuity contract that are not collectible. For investments that are financial instruments, paragraph 4600.32 requires pension plans to provide the disclosures required by IFRS 7 Financial Instruments: Disclosures as well as the fair value disclosures required by the Appendix to Section 4600. The Board thinks that, once the amendments take effect, paragraph 4600.32 disclosures may become less useful for buy-in annuity contracts. The Board will seek feedback from its Pension Plan Working Group in April 2023 and consider whether to amend the disclosure requirement in paragraph 4600.32 to scope out buy-in annuity contracts.

Disclaimer

This project summary has been prepared for information purposes only. Decisions reported are tentative and reflect only the current status of discussions on this project, which may change after further Board deliberations. Decisions to publish Handbook material are final only after a formal voting process.