IFRS note disclosures ‘very comprehensive’ already – PensionsEurope

IFRS note disclosures are already “very comprehensive” PensionsEurope has said, in response to a consultation on developing disclosure requirements and proposed amendments to IFRS 13 and IAS 19.

The association highlighted that companies providing pension benefits and sponsoring pension plans, as well as pension funds, are already applying the materiality concept in their notes disclosures. Therefore, no irrelevant disclosures are published.

“PensionsEurope believes that the note disclosures with regards to pension plans are already very comprehensive in current annual financial statements, e.g., reconciliations, cash-flow information, sensitivity analysis, disaggregation of information for different defined benefit plans per country etc,” it stated in response.

“Most of the information disclosed in the notes covers already the proposed disclosure objectives. For this reason, it is unclear, how the new concept should better meet the users' needs. In the proposal, there is only one overall disclosure objective for short-term benefits, defined contribution plans, other long-term employee benefits and termination benefits. Therefore, it is unclear which disclosures are expected by the IASB for these benefits in comparison to the current disclosure practice.”

Furthermore, PensionsEurope believes that some of the proposed non-mandatory items of information are not useful, e.g., expected return on plan assets (eroa), expected future contributions, alternative actuarial assumptions due to judgement reasons. In these cases, PensionsEurope stated that the cost to obtain the information is higher than the usefulness for users. In addition, it believes that additional explanations are necessary.

“Moreover, the reintroduction of the eroa-concept after abolishing it just a few years ago is not consistent with IAS 19. In addition, some preparers are concerned that the comparability of data with their peers (e.g., other listed blue-chip companies) will be impaired by the current proposals. The compliance with the objective-based disclosure requirements could lead to intensive discussions with auditors and enforcement bodies when it comes to the exercise of judgement.

“To conclude, preparers have not received so far, any material feedback from investors that relevant information is missing and PensionsEurope believes that a checklist approach has its advantages and is not fundamentally worse. It should also be noted that any structured disclosure process needs checklists – also to decide which information will not be provided due to materiality reasons.”

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