Plan Amendments

CFA Level II
#1

Hi All,

If we are given plan amendments in a pension item set what would we do with this?

Is the only place this is used when we are reconcilling from beginning PBO to end PBO? (So if plan amendments was a negative number we would subtract this in the PBO rec?)

I have never seen any item sets that use plan amendments until I came across one in the topic tests and it threw me.

Any info on this term and its use would be great.

Rex

#2

Plan amendments will likely translate into past service costs.

Those will affect ending PBO, pension cost, pension expense (definitely under IFRS, maybe under US GAAP (if a portion is amortized this year)), and OCI (under US GAAP, but not under IFRS).

#3

Thank you Magician,

So to confirm, for the purposes of the exam, the two terms should be interchangeable?

I.e we shouldn’t expect to see Past service costs and plan amendments on an item set.

#4

My pleasure.

I would take them as synonymous.