Pension Expense (Actuarial G/L)

CFA Level II FRA
#1

Hi,

Quick questions for you guys on Acutarial G/L (AGL).

a) TOTAL PERIODIC COST (Economic Cost)

Do we need to include AGL only under IFRS ?

b) Reported Pension Expense (Accounting Cost)

Do we need to include the Ammortization of AGL in our calculation according to the 10% Corridor Approach (US GAAP) ?

If AGL < 10% of Beg Plan Asset or Beg PBO => We do not ammortize anything

if AGL > 10% of Beg Plan Asset or Beg PBO => We do need to ammortize the AGL (over the life of the remaining service)

Thanks

#2

a. TOTAL periodic pension cost = contribution - changes in the funded status of the pension plan.

The AGL is included when you calculate the PBO of the plan (in both US GAAP and IFRS), which is necessary to calculate the funded status of the plan. Then, somehow, AGL has already been incorporated in the Total periodic pension cost.

b. I’m not so sure about this. :smiley:

#3

Thanks,

And in terms of Balace Sheet, under IFRS, the AGL would also go to OCI, correct ?

#4

Yeah. They all go to OCI.