Document ID: chunk:federal_register_of_legislation:F2024L00075:reg:38:p52
Version: federal_register_of_legislation:F2024L00075
Segment Type: reg
Provision Reference: reg 38 (pt 52/76)
Character Range: 180062–183248

risks to which most superannuation entities are exposed in relation to insured benefits are credit and operational risks of the (re)insurer, and risks associated with the plan administering policies (such as the risk of higher than expected claims administration expenses).
BC160        The AASB also noted that:
(a)                   insurance contract liabilities in respect of defined benefit members are measured as part of members' accrued benefits under AAS 25;
(b)                   for the purpose of recognising a net defined benefit member liability under AASB 119, the level of aggregation (unit of account) is the cohort of employees with defined benefit entitlements and any insurance contract liabilities are calculated as a part of the 'best estimate' cash flows, which contrasts with AASB 1038, which is designed to cater for life insurers and incorporates the notions of experience adjustments as well as adjusting planned margins for the impacts of changes to assumptions;
(c)                   insurance contract liabilities in respect of defined benefit members are likely to be measured at a similar amount under the accumulation approach in AASB 1038 as they would be under the approach in AASB 119 for defined benefit member liabilities;
(d)                   under AASB 119, no distinction is made between retirement benefits and insurance benefits in respect of the measurement or presentation of defined benefit member liabilities; and
(e)                   an entity could use estimates, averages or computational shortcuts permitted in AASB 119 in measuring its defined benefit member liabilities, such as a cash premiums basis to measure the insurance component of its liability to defined benefit members, or its liabilities arising from insurance arrangements provided to defined contribution members, if the outcomes are not materially different from those that would otherwise be achieved using an expected present value basis.
BC161        Accordingly, the AASB decided ED 223 should propose that insurance obligations to members be:
(a)                   recognised (and derecognised) using the AASB 119 approach for defined benefit member liabilities;
(b)                   for defined benefit members, measured as part of accrued benefits using the measurement approach in AASB 119 for defined benefit member liabilities;
(c)                   for defined contribution members, measured using the approach in AASB 119 for defined benefit member liabilities, to facilitate consistency with the requirements for defined benefit member liabilities;
(d)                   presented separately from any liabilities for defined contribution members' vested benefits (when material) – separate presentation should not be required in relation to defined benefit members' accrued benefits, consistent with the approach in AASB 119; and
(e)                   any reinsurance assets should be recognised in accordance with AASB 1038.
BC162        The AASB also decided ED 223 should propose that information should be disclosed that explains and provides users with a basis for understanding the amount, timing and uncertainty of future cash flows arising from