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Hi
I don’t understand the actuarial gains treatment using 10% corridor.
Eg If there is an actuarial gain of £10m, and the corridor systm is used, does this mean that the pension asset will not be debited the £10m, but only the value determined using corridor method?
Thanks
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i don’t get your question quite clear, but the corridor approach sates that if the amount of cumulative unrecognized loss or gain at the start of the current year is greater than the higher of
10% of plan assets and
10% of PV of obligations at the start of that period
then the excess (apportioned for the average remaining working lives of employees) should be recognised in the IS.
E.g if the excess is say $5 and the remaining life of employees is 5 yrs, then $1 per annum will be treated in the IS for the 5 yrs , starting from the current period.
I hope this explanation helps.- Topics: 5
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Timmy,
can you please give further details in order we could better understand this topic:We have pension obligations (changes due to discount rate for obligation) and we have pension assets (changes due to expected return). Additionally all this changes due to paid in obligations and taken out.
Can you bring all this together for our full understanding: what goes to BS and what to P/L? thanks a lot in advance.
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