Presentation of Overfunded DB Plan in Reporting Entity Accounts

The Reporting entity maintains irrevocable trust for Defined Benefits Obligations of its employees. There is no further contribution required to be made to the trust as all the members of the trust shall be retiring within 2-3 years. Current Status of the plan is overfunded, therefore the reporting entity has disclosed the amount by which the plan is overfunded as an asset in its books of accounts. The amount is calculated by the actuary. 

Since the overfunded amount will never by returned by the trust due to trust being irrevocable, whether the treatment of the amount by which the plan is overfunded considered as an asset by the reporting entity is in line with Ind AS 19.

Replies (4)
Quick Summary
This discussion explores the accounting treatment of an overfunded Defined Benefit (DB) pension plan within a reporting entity's accounts. The core question is whether an overfunded amount, held in an irrevocable trust with members retiring soon, can be recognised as an asset under Ind AS 19, especially since the funds are not expected to be returned. The conversation touches upon asset classification (current vs. non-current) and potential reversals, with suggestions to consult ESI or visit their office for clarity on specific schemes like EPFO.

I wouldn’t worry if it is a big company. As assets and liabilities tally. Ie., money pooled into the scheme and invested from bank balance. 

Whether the asset created shall be shown as Current or Non-current.

Current pension asset for current and adjust non current for extra amount. There should be a reversal, which I am not sure about, contacting esi will be better idea. Don’t mail, you’ll not get a reply. Visit the office personally

I searched all over the net and could not find how to reverse epfo payments. Some employee who’ll get more funds, so better raise a service request from the pensions office. Did you use epfo?

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