Accounting Standards for Pension Plans

Pension Plans

Summary

Pension plans and benefit plans that have characteristics like pension plans and provide benefits other than pensions, apply the accounting standards for pension plans in Part IV of the CPA Canada Handbook – Accounting.

These entities are publicly accountable enterprises, but they are required to apply a separate set of Canadian standards rather than IFRS^® Standards.

This was determined by the AcSB, as the Board concluded that IAS 26 Accounting and Reporting by Retirement Benefit Plans did not provide adequate guidance for such entities.

The AcSB intends to maintain Part IV until the International Accounting Standards Board replaces IAS 26. Section 4600, Pension Plans, in Part IV of the Handbook refers to either IFRS Standards in Part I of the Handbook, or accounting standards for private enterprises in Part II of the Handbook.

As a result, pension plans should monitor activities related to the standards in Part I or Part II, since amendments made to those standards may affect them.

Staff Contact(s)

Amanda Winter, CPA, CA Principal, Accounting Standards Board

+1 416 204 3241

[email protected]

Shalini Gupta, CPA, CA Principal, Accounting Standards Board

+1 647 956 6628

[email protected]

Project Status

Information gathering

Developments in this sector are monitored to determine when an improvement project should start and for signs that emerging new types of pension plans requiring standard-setting attention are appearing in the marketplace

The AcSB is working with other jurisdictions to advance the collective understanding of global developments in this area
Approving project

In September 2021, the AcSB approved a project to address some of the issues raised by stakeholders
Consulting stakeholders

Exposure Draft issued in March 2022

Public outreach took place from April-June 2022
Deliberating feedback

AcSB deliberated feedback in July-September 2022
Final pronouncement

Final amendments issued in the CPA Canada Handbook – Accounting on December 16, 2022

News

March 1, 2022 Document for Comment

AcSB Exposure Draft – Pension Plans

The AcSB wants your feedback on improvements to Section 4600, Pension Plans. The Pension Plans Exposure Draft proposes to clarify areas of ambiguity and introduce new guidance in areas where no guidance currently exists. The amendments would affect pension plans applying the standards in Part IV of the Handbook. Submit your comments by June 15, 2022.

Meeting & event summaries

October 11, 2022 AcSB Decision Summary – September 14-15, 2022

The AcSB completed its deliberations on stakeholder comments on the Exposure Draft, “Pension Plans,” after considering the feedback of its Pension Plan Working Group. The Board also reviewed a draft of the amendments, reflecting its decisions at its July 2022 meeting.

The AcSB decided to make amendments to clarify its intent regarding:

the criteria for derecognizing a pension obligation transferred to a third party in a buy-out arrangement; and
the dates on which assets and liabilities would be recognized in an amalgamation and derecognized in a split.

The AcSB approved the issuance of the final amendments to Section 4600, Pension Plans subject to drafting and a written ballot. The Board plans to issue the amendments in mid-December 2022.

August 10, 2022 AcSB Decision Summary – July 20-21, 2022

The AcSB considered the sufficiency of feedback from its outreach activities and comment letters received on the Exposure Draft, “Pension Plans.” The Board concluded that it received sufficient feedback from stakeholders including practitioners, preparers, users, provincial accounting bodies, regulators, academics, actuaries, and other individuals.

The AcSB then deliberated stakeholder feedback on its Exposure Draft. The Board tentatively decided to:

include a requirement to disclose the applicability and status of a regulatory discharge for arrangements in which an entity purchases an annuity from a third party that assumes some or all of the obligations of the pension plan (commonly referred to as “buy-out” annuity contracts);
reiterate that plans do not need to remeasure the amount of pension obligations transferred to a third party subsequent to the year of transfer in a buy-out annuity contract;
add disclosure requirements for investments in a master trust to provide for cases where the plan’s position is not proportionate to the plan’s total position in the master trust; and
defer the effective date to annual periods beginning on or after January 1, 2024, with earlier application permitted.

The AcSB tentatively decided to finalize the following proposals in the Exposure Draft, subject to certain minor edits:

clarifying that a statement of changes in pension obligations is not required for defined contribution pension plans;
guidance on determining the split or amalgamation date for pension plans;
recognition, measurement, and disclosure guidance on the accounting for guaranteed annuity contracts (commonly referred to as “buy-in” annuity contracts);
most of the derecognition guidance for pension obligations transferred to a third party in a buy-out annuity contract;
additional risk disclosures for investments in master trusts; and
presentation requirements for combination plans.

The AcSB plans to review a draft of the final amendments to Section 4600, Pension Plans, at its September 2022 meeting.

March 8, 2022 AcSB Decision Summary – February 23, 2022

The AcSB approved a communications and outreach plan for the upcoming Pension Plans exposure draft. The Board intends to engage in targeted consultation activities with industry and regulatory groups and hold general roundtable discussions for all pension stakeholders.

The AcSB also discussed other topics its Pension Plan Working Group raised, which are broader in scope than those addressed in the upcoming exposure draft. These included valuation of defined benefit obligations, presentation of investment management fees and investment disclosures. The Board will discuss how to prioritize these topics in the context of its other domestic standard-setting agenda at its March 2022 meeting.

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 ballot process.