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SFAS No.
18
Accounting for Pensions |
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 Status |
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Revised by
the Financial Accounting Standards Committee in Taiwan on 22
September, 2005. |
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Summary |
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Scope |
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The purpose of this Statement is to
establish the accounting standard for employers' |
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accounting for pensions. This
statement also includes an employer's accounting for |
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amendment of defined benefit pension
plans, for settlement of defined benefit pension |
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obligations, for curtailment of a
defined benefit pension plan, and for termination
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benefits. |
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Defined Contribution Plans |
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When providing defined contribution
plans, an enterprise should recognize the amounts |
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to be contributed as current expense
for the employees' employment period. |
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Defined Benefit Plans |
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Net pension costs |
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The net pension cost recognized for
each period by an employer shall include the |
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following components: |
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(a) service
cost; |
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(b) interest
cost; |
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(c) expected
return on plan (fund) assets; |
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(d) amortization
of unrecognized prior service cost; |
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(e) amortization
of unrecognized pension gain or loss; |
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(f) amortization
of unrecognized transitional net assets or net benefit obligations;
and |
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(g)
curtailment and/or settlement gain and
loss. |
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Prior service costs |
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The prior service costs should be
amortized on a straight-line basis over the average |
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period from the plan effective or
amendment date until the benefits become vested. |
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Amendment |
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If the projected benefit obligation is
reduced by a plan amendment, then the reduction shall be used to
reduce prior service cost for the same plan, and the excess, if any,
shall be amortized over the same period specified in the preceding
paragraph. |
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Net pension gain or loss |
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If the unamortized net pension gain or
loss exceeds 10 percent of the greater of |
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projected benefit obligation or the
fair value of plan assets, as at the beginning of the |
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year, the excess shall be amortized,
and the amortization shall be included in net |
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pension costs. The minimum amount of
amortization shall be that excess divided by |
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the average remaining service period of
those employees who are still in service and |
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expected to receive pension benefits. |
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The amount amortized for pension gain
is limit to the excess of the net cumulative |
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unamortized pension gain over the
unrecognized transitional net benefit liability. |
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Recognition of assets and liabilities |
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If the amount contributed to the plan
(fund) assets by the employer is less than the |
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net pension cost, then the difference
shall be recognized as an accrued pension |
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liability; and if the amount
contributed is larger, then the difference shall be recognized
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as a prepaid pension cost. |
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Prepaid pension cost should not exceed
the total of: (i) unamortized pension loss; (ii) |
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unamortized prior service cost; and
(iii) the present value of refunds from the plan or |
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reductions in future contributions to
the plan. |
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If the accrued pension liability
recorded on the books is less than the minimum |
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amount required, the difference shall be
recognized by crediting accrued pension |
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liability. |
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Curtailment and settlement |
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When curtailment and/or settlement
occur to an enterprise providing defined benefit |
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plan, the enterprise should recognize
curtailment and/or settlement gains or losses as part of the net
pension cost for the period. |
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Disclosure |
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An employer sponsoring a defined
benefit pension plan should disclose the following |
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items in the body or notes of its
financial statements: |
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(a) |
A
description of the plan: including employees covered by the plan,
the formula |
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which calculates benefits, the funding policy of the pension fund,
plan (fund) assets |
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and
other significant matters affecting the comparability of the
financial statements |
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for
all periods presented and impact thereon. |
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(b) |
The
amount of net periodic pension costs: reporting separately the
service cost, the |
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interest cost, the actual return on plan assets, and the net total
of other components. |
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(c) |
A
reconciliation statement reporting the funded status of the pension
plan (fund) |
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and
amounts reported in the balance sheet (simply known as statement of
funding |
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status for pension plan (fund)). |
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(d) |
Vested benefits. |
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(e) |
The
discount rate and rate of compensation increase used to measure the
projected |
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benefit obligation and the expected long-term rate of return on
pension plan assets. |
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(f) |
If
securities of the employer and related parties are included in
pension plan (fund) |
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assets, the amounts and types of these securities. |
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(g) |
If
alternative methods are used to amortize prior service cost and
pension gain or |
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loss, the methods; and if there are commitments to make future
amendments to |
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increase prior service cost, the fact and nature. |
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Accounting during the
transitional period |
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An employer that has sponsored a
pension plan and did not follow this Statement before |
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the enforcement of this Statement
should compute the transitional net assets or net |
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benefit obligation when this Statement
is first applied. The unrecognized net assets |
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or net benefit obligation should be
amortized on a straight-line basis over the average |
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remaining service period of employees
still in service and expected to receive benefits, |
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and should be included in the net
pension cost. If the average remaining service |
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period is less than 15 years, however,
the employer may elect to use a period of |
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15 years for amortization purposes. |
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Effective
date
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This statement becomes effective for
financial statements for the fiscal year ending on
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or after December 31, 2002. |
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