26.9.2023
EN
Official Journal of the European Union
L 237/129
Paragraph A1 provides related application guidance.
94
For contributions from employees or third parties that are attributed to periods of service in accordance with paragraph 93(a), changes in the contributions result in:
(a) current and past service cost (if those changes are not set out in the formal terms of a plan and do not arise from a constructive obligation); or
(b) actuarial gains and losses (if those changes are set out in the formal terms of a plan, or arise from a constructive obligation).
95
Some post-employment benefits are linked to variables such as the level of state retirement benefits or state medical care.
The measurement of such benefits reflects the best estimate of such variables, based on historical data and other reliable evidence.
96
Assumptions about medical costs shall take account of estimated future changes in the cost of medical services, resulting from both inflation and specific changes in medical costs.
97
Measurement of post-employment medical benefits requires assumptions about the level and frequency of future claims and the cost of meeting those claims.
An entity estimates future medical costs on the basis of historical data about the entity’s own experience, supplemented where necessary by historical data from other entities, insurance companies, medical providers or other sources.
Estimates of future medical costs consider the effect of technological advances, changes in health care utilisation or delivery patterns and changes in the health status of plan participants.
98
The level and frequency of claims is particularly sensitive to the age, health status and sex of employees (and their dependants) and may be sensitive to other factors such as geographical location.
Therefore, historical data are adjusted to the extent that the demographic mix of the population differs from that of the population used as a basis for the data.
They are also adjusted where there is reliable evidence that historical trends will not continue.
Past service cost and gains and losses on settlement 99
When determining past service cost, or a gain or loss on settlement, an entity shall remeasure the net defined benefit liability (asset) using the current fair value of plan assets and current actuarial assump­ tions, (including current market interest rates and other current market prices), reflecting:
(a) the benefits offered under the plan and the plan assets before the plan amendment, curtailment or settlement; and
(b) the benefits offered under the plan and the plan assets after the plan amendment, curtailment or settlement.
100
An entity need not distinguish between past service cost resulting from a plan amendment, past service cost resulting from a curtailment and a gain or loss on settlement if these transactions occur together.
In some cases, a plan amendment occurs before a settlement, such as when an entity changes the benefits under the plan and settles the amended benefits later.
In those cases an entity recognises past service cost before any gain or loss on settlement.
101
A settlement occurs together with a plan amendment and curtailment if a plan is terminated with the result that the obligation is settled and the plan ceases to exist.
However, the termination of a plan is not a settlement if the plan is replaced by a new plan that offers benefits that are, in substance, the same.