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IAS 19 Amendments - Discount Rate for Employee Benefits


IAS 19 requires to determine the discount rate for employee benefits by reference to high quality corporate bonds. When there is no deep market for such bonds entities should refer to government bonds. Given the recent widening of the spread between yields on corporate and government bonds this may lead to significant differences. The Board suggests to amend IAS 19 and require that when there is no deep market entities should estimate the rate for high quality corporate bonds using IAS 39 guidance on fair values.

On 9 October 2009, EFRAG issued its final comment letter. EFRAG's main concern was the applicability of the IAS 39 Financial Instruments: Recognition and Measurement guidance for estimating the yield on high quality corporate bonds.

In October 2009, the Board considered the responses to the ED. The general input was that the proposed amendment raised more complex issues than had been expected. The Board therefore decided to adhere to its original plan to address measurement issues only in the context of a fundamental review of IAS 19. Thus, the Board decided not to proceed with the amendment.

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