Document ID: chunk:federal_register_of_legislation:F2024L00075:reg:38:p40
Version: federal_register_of_legislation:F2024L00075
Segment Type: reg
Provision Reference: reg 38 (pt 40/76)
Character Range: 145538–148806

modified wording and decided to refer to defined contribution member liabilities being measured at the amount of account balances at the reporting date.  The AASB also concluded that it should specify the measurement of 'accrued benefits' of defined contribution members to be consistent with the requirements in other Australian Accounting Standards and to be internally consistent in respect of both defined contribution member liabilities and defined benefit member liabilities.

Defined benefit members' accrued benefits
BC113        In developing ED 179 and ED 223, the AASB considered a number of bases for measuring defined benefit member liabilities, including:
(a)                   at fair value consistent with the IASB Discussion Paper proposals that have now led to AASB 13;
(b)                   at current exit value consistent with a model in the IASB's Discussion Paper Preliminary Views on Insurance Contracts;[10]
(c)                   at present value of the expected future benefit payments consistent with the requirements of AAS 25; and
(d)                   at present value of the expected future benefit payments consistent with AASB 119 for defined benefit member liabilities.
BC114        With respect to paragraphs BC113(a) and BC113(b), the AASB noted:
(a)                   a fair value or current exit value could potentially:
(i)                     provide useful information to users, particularly in relation to the amount, timing and uncertainty of future benefit payments; and
(ii)                   facilitate consistency of reporting (with most assets being measured at fair value);
(b)                   defined benefit member liabilities are not traded as stand-alone items and are generally extinguished in the normal course of business.  While the absence of an active market for defined benefit member liabilities does not preclude such fair value measurement, the issues that would need to be addressed to achieve consistency across superannuation entities would be potentially insurmountable.  The issues include estimating risk margins, service margins and costs of capital, and putting a price on the 'moral hazard' implications of one or more (third party) employer-sponsors deciding on employees' salary adjustments; and
(c)                   fair value or current exit value would be inconsistent with:
(i)                     achieving closer alignment between the treatment of defined benefit member liabilities recognised by employer-sponsors and superannuation entities;
(ii)                   thinking included in the IASB Exposure Draft of proposed amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets and IAS 19 Employee Benefits,[11] that the amount an entity would rationally pay to extinguish a liability is the lower of its settlement or transfer amounts; and
(iii)                 the reasoning behind the proposals to apply a 'fulfilment approach' in the AASB's ED 244 Insurance Contracts, which incorporates the IASB's ED/2013/7 Insurance Contracts.[12]
BC115        Due to the relative weight of argument, the AASB concluded against proposing that defined benefit members' accrued benefits be measured at fair value or current exit value.
BC116        In relation to paragraph