The board also decided during a recent discussion that the new defined return plan category will capture plans including cash balance plans and plans where a benefit level is expressed relative to the performance of an equity-type index.
According to the press release, the board decided to create another category because the accounting for the two options of defined contribution or defined benefit did not match the complexity of pension plan design in the marketplace.
The IASB said that it will keep the defined benefit category as its default for all plans that don’t fall under the defined return plan category.
IASB instructed staff to look a “building block”
approach to the measurement of defined return plan
obligations – specifically the requirement to make
contributions – and the promised return.
The board plans to publish its discussion document on pension accounting in the first quarter of 2008.
IASB launched its review of pension accounting in July
2006, which included a two-phase project to align its
standards with the U.S. Financial Accounting Standards
Board (FASB) (See
IASB Begins Project to Align Standards with US FASB)
. The first phase focused on reviewing smoothing
or deferral mechanisms, cash balance retirement plans, and
plan settlements and curtailments.