Defined contribution pension plan, Defined benefit scheme - International Financial Reporting Standards

Defined contribution plan

Defined contribution plans assume that the company performs fixed contributions to a separate fund and does not have any legal or traditional obligation to pay additional contributions if the fund does not have sufficient funds to pay all employee benefits , due for services rendered by them in the current and previous periods.

11.14. Accounting for defined contribution plans is carried out on a linear basis, as the company's obligations for each period are determined in the amount of contributions for this period.

In addition, actuarial assumptions are not required and the company does not receive any actuarial gains or losses.

11.15. The company recognizes contributions to the plan as an expense when the employee provides his services in exchange for similar contributions. If the contributions do not become indebted within 12 months after the end of the accounting period in which the services are provided, the contributions should be discounted.

Defined benefit plan

11.16. Accounting for defined benefit plans require actuarial assumptions and liabilities are measured on a discounted basis because they may be executed in many years after the period in which the employees render the related service.

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11.17. The amount recognized as a liability under a defined benefit plan is calculated as follows:

• the discounted amount of liabilities at the reporting date is determined;

• any actuarial gains less any actuarial losses are added;

• Unrecognized costs related to services in previous periods are deducted;

• the actual value of plan assets is subtracted at the reporting date.

Cost of current services - increase in the present value of the defined benefit obligation as a result of the provision of services by the employee in the current period.

Recognition and measurement: Present value of defined benefit obligation and current service cost

Revenue on the plan asset - interest, dividends and other income received from plan assets, together with realized and unrealized profits and losses minus any management costs of these assets and taxes payable in respect of this plan.

11.18. The final costs of a defined benefit pension plan depend on many variables, in particular:

• on the amount of wages at the time of retirement;

• turnover and death rates of staff;

• Investment income on plan assets, etc.

11.19. To estimate the final costs (discounted value of obligations) and the cost of current services, you need:

• Apply the actuarial valuation method;

• distribute the compensation for the periods of service;

• make actuarial assumptions.

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