Pension Expense

I understand total periodic pension cost equals contributions minus change in funded status, but my question is pension expense

Do I have this right: Pension expense = service cost + interest cost + past service costs - expected return on plan assets

should I include actuarial gains and losses too?

I’m having the same problem here

I believe it is slightly different depending on if it is GAAP or IFRS (feel free anyone to correct me if I am wrong on this one):

Under IFRS Pension Expense = Service Cost + Net Interest Exp (since it is required that you use the same discount rate on expected plan asset returns as you do in PBO) + Past Serivce Costs (expensed out immediately in IFRS)

Actuarial Gains or Losses under IFRS stay in OCI and are not amortized, thus they do not affect pension expense.

GAAP Pension Expense: Service Cost + Int Exp - Expected Return on Plan Assets + Amortization of Past Service Costs + Amortization of Actuarial Gains or Losses (using corridor approach)

Yes, can someone please clarify this??

I think he nailed it. It impacts pension expense under GAAP if corridor method (Or faster method) have been implemented. You also amortize past service costs over the expected life of the employee slowly moving it from OCI to IS, whereas IFRS I think is immediately expensed

Yes but I also have written down that the components of pension expense are 1) service cost (I/S) 2) net interest cost (I/S) 3) remeasurements (OCI) which include actuarial G/L and actual - expected return on plan assets?

In GAAP, yes. IFRS it doesn’t amortize.

Specifically, IFRS does not allow amortization from OCI into I/S- that can help you remember…

So in IFRS, actual pension expense (service cost + actual service cost +/- net interest expense) is different than the components of pension cost??

With regards to the corridor approach, am I correct in saying that you only amortize G/L that amount over the “threshold” value calculated from 10% of the greater of FMV or PBO from the B/S? Otherwise you do NOT amortize?