Document ID: chunk:federal_register_of_legislation:F2024L00075:reg:38:p70
Version: federal_register_of_legislation:F2024L00075
Segment Type: reg
Provision Reference: reg 38 (pt 70/76)
Character Range: 231734–234801

the AAS 25 definitions for 'defined contribution plan' or 'defined benefit plan' (which themselves are not included in AASB 1056 because that entity-based dichotomy is no longer relevant).

Other issues raised on definitions
BC237        In ED 179, the AASB proposed that:
(a)                   the definition of the term 'vested benefits' should be based on the definition of the same term in AASB 119, but amended to reflect the nature of such benefits in a superannuation context; and
(b)                   the term 'accrued benefits' should be defined broadly to cover both defined contribution and defined benefit arrangements.
BC238        Several respondents to ED 179 raised concerns with the applicability of the definition of vested benefits in the context of defined benefit members.  The AASB noted, for a superannuation entity with only defined contribution members, the amount of its member liabilities may not change as a consequence of the timing or circumstances of a member's departure (for example, resignation, retrenchment or retirement).  However, depending on the relevant trust deed, different timing or circumstances may give rise to different entitlements for defined benefit members.  Accordingly, in ED 223 the AASB proposed the definition of vested benefits be amended to clarify that:
(a)                   vested benefits are the benefits a member would be entitled to on voluntary withdrawal from their superannuation entity at the end of the period; and
(b)                   in the context of defined benefit members' vested benefits, the term 'withdrawal' could be interpreted to mean voluntary withdrawal by the member from either the defined benefit section of the entity or from the entity itself.
BC239        One respondent to ED 179 noted the proposed 'defined benefit member' definition did not identify the employer-sponsor's responsibility for investment risk as a distinguishing feature, and is not adequately distinguished from defined contribution members.  However, the AASB was not persuaded by this view because investment risk is not a defining characteristic of such arrangements, for example, for employer-sponsors of unfunded defined benefit public sector schemes.

Effective date and transition on initial application
BC240        The AASB noted that, given the extent of the changes, unless comparative information is prepared on the same basis as the current period information in the year of transition, the comparative information would not be useful.  Accordingly, the AASB concluded the AASB 1056 requirements should be applied retrospectively in accordance with paragraphs 19 to 27 of AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors and, therefore, the comparative information on transition should be prepared on the basis of the AASB 1056 requirements.
BC241        The AASB considered the time that superannuation entities would need to adjust their financial reporting systems in order to transition from applying the requirements of AAS 25 to applying the requirements of AASB