4/11/2023

Accounting and
Reporting by
Retirement
Benefit Plans
Philippine Accounting Standards (PAS) 26

Learning Objectives

• State the applicability of PAS 26.

• Describe the accounting and reporting requirements of PAS 26.

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Objective

PAS 26 specifies measurement and disclosure principles

for the reports of retirement benefit plans.

Scope

PAS 26 applies to the preparation of financial statements

of retirement benefit plans (also called “pension
schemes”, “superannuation schemes” or “retirement
benefit schemes”)
PAS 19 PAS 26
 Applied by an employer in  Applied by, for example, a
(among others) determining trustee, when preparing the
the cost of providing financial statements of a
retirement benefits. retirement benefit plan.
PAS 26 complements PAS
19. 5

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Financial Statements of a
Defined Contribution Plan
• a statement of net assets available for benefits;
• a statement of changes in net assets available for
benefits; and
• accompanying notes to the financial statements

Financial Statements of a Defined

Contribution Plan - Sample

Entity A - Defined Contribution Plan Entity A - Defined Contribution Plan

Statement of Net Assets Available for Benefits Statement of Changes in Net Assets Available for Benefits
as of December 31, 2020 for the period ended December 31, 2020

2020 2019 2020 2019

ASSETS ADDITIONS
Investments at fair value 1,120,000 484,000 Net fair value changes 940,000 240,000
Investments at contract value 1,020,000 1,020,000 Interest Income 42,000 30,000
Contributions receivable from employer 60,000 - Dividends Income 106,000 50,000
Total Assets 2,200,000 1,504,000 1,088,000 320,000
Contributions 140,000 200,000
LIABILITIES Total Additions 1,228,000 520,000
Accrued Management fee payable - 4,000
NET ASSETS AVAILABLE FOR BENEFITS 2,200,000 1,500,000 DEDUCTIONS
Benefits paid to participants 500,000 -
Administrative expenses 28,000 20,000
Total Deductions 528,000 20,000

Net Increase for the period 700,000 500,000

Net Assets Available for Benefits, beg 1,500,000 1,000,000
NET ASSETS AVAILABLE FOR BENEFITS, END 2,200,000 7
1,500,000

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Financial Statements of a
Defined Benefit Plan
1. a statement that shows: 2. a statement of net assets
available for benefits including
a. the net assets available for either:
benefits;
b. the actuarial present value of
O a. a note disclosing the actuarial
present value of promised
promised retirement benefits,
distinguishing between vested
benefits and non-vested
R retirement benefits,
distinguishing between vested
benefits and non-vested
benefits; and
benefits; or
c. the resulting excess or deficit b. a reference to this information
(PAS 26.17)
in an accompanying actuarial
report. (PAS 26.17)
A statement of changes in net assets available for benefits and
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accompanying notes are provided in both (1) and (2) above.
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Disclosures
• Summary of significant accounting policies
• Descriptions of the plan and the effect of any changes in the plan during the
period
• Details of any single investment exceeding 5% of net assets or 5% of any category
investment
• Details of any investment in the employer and employee, if applicable
• Analysis of benefits paid or payable according to, for example retirement, death
and disability benefits, and lump sum payments.
• Funding policies and, for defined contribution plans, investment policies
• Investment income on the plan assets
• Administrative, tax, and other expenses
• Transfers from or to other plans
• For defined benefit plans, actuarial present value of promised benefit obligations,
description of actuarial assumptions, description of the method used to calculate
the actuarial present value of promised benefit obligations 9