Document ID: chunk:federal_register_of_legislation:F2024L00075:reg:38:p39
Version: federal_register_of_legislation:F2024L00075
Segment Type: reg
Provision Reference: reg 38 (pt 39/76)
Character Range: 142644–145808

a pro rata share of the net assets of the entity only on liquidation of the entity.[9]
BC107        The AASB noted that applying the puttable instruments exception could give rise to inconsistent reporting outcomes – for example:
(a)                   defined contribution members' entitlements held by an entity with only defined contribution members might meet the criteria necessary to be classified as equity; and
(b)                   defined contribution members' entitlements held by a hybrid plan and defined benefit members' entitlements would not generally meet the criteria necessary to be classified as equity.
BC108        The AASB considered that having different reporting outcomes depending upon the impact of the puttable instruments requirements would be inconsistent with principles-based standard-setting and would diminish the comparability and usefulness of the financial statements of superannuation entities.  Both ED 179 and ED 223 identified the issue with puttable instruments in a superannuation entity context.  The consensus from those commenting on the matter is that it would not be useful to show some or all member benefits as equity of a superannuation entity.  Accordingly, the AASB concluded that the puttable instruments exception should not apply to superannuation entities.

Measurement

Defined contribution members' vested benefits
BC109        In both ED 179 and ED 223, the AASB identified defined contribution members' vested benefits as representing the amount that would be payable on demand:
(a)                   upon the member's retirement, death, disablement or other event that qualifies as a condition for releasing their superannuation benefits; or
(b)                   to another regulated superannuation entity under the Superannuation Guarantee (Administration) Act.
BC110        The AASB noted the net assets attributable to defined contribution members would include items that it proposes be measured at amounts other than their fair values, such as tax liabilities and tax assets.  However, the AASB concluded that, as most assets and liabilities attributable to defined contribution members would be measured at their fair values, the difference between defined contribution members' vested benefits measured entirely at fair value or in accordance with AASB 119 would in most cases not be expected to be material.
BC111        Some respondents to ED 179 and ED 223 commented that the expression 'amount payable on demand' is inappropriate because it might imply that members could immediately access their benefits without meeting a condition of release.  Some respondents also queried why 'vested benefits' should be specified for defined contribution member liabilities, yet 'accrued benefits' is specified for defined benefit member liabilities.
BC112        The AASB concluded that it could achieve its intended outcome with 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