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hello tutor, hope you’re doing well..
Fixed annuity ceasing on death (defined benefit plans) meets the definition of insurance contract which are outside the scope of IFRS 9 as are employers obligations under IAS 19.
Fixed annuity with payments to director’s estate on death (meets the definition of financial liability IAS 32)
Could you kindly elaborate the above two statements?
Thanks.
IFRS9 specifies that the IFRS treatment of financial instruments does not apply to liabilities under defined benefit pension plans where payments to the retired employee stop on the death of that retiree with no further sums being payable to the surviving spouse.
But a pension scheme can be designed so that the surviving spouse of the deceased former employee continues to receive a monthly payment by way of annuity from the deceased spouse’s former employer. In that situation, IAS 32 says that it does meet the definition.
Is that ok?
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