Page 246 - Group Insurance and Retirement Benefit IC 83 E- Book

Employee Benefits 195

84. Estimates of future salary increases take account of inflation,
seniority, promotion and other relevant factors, such as supply and
demand in the employment market.

85. If the formal terms of a plan (or an obligation that goes beyond those
terms) require an enterprise to change benefits in future periods, the
measurement of the obligation reflects those changes. This is the case
when, for example:

(a) the enterprise has a past history of increasing benefits, for
example, to mitigate the effects of inflation, and there is no
indication that this practice will change in the future; or

(b) actuarial gains have already been recognised in the
financial statements and the enterprise is obliged, by either the
formal terms of a plan (or an obligation that goes beyond
those terms) or legislation, to use any surplus in the plan for
the benefit of plan participants (see paragraph 96(c)).

86. Actuarial assumptions do not reflect future benefit changes that are
not set out in the formal terms of the plan (or an obligation that goes
beyond those terms) at the balance sheet date. Such changes will result in:

(a) past service cost, to the extent that they change benefits for
service before the change; and

(b) current service cost for periods after the change, to the extent that
they change benefits for service after the change.
87. Some post-employment benefits are linked to variables such as the
level of state retirement benefits or state medical care. The measurement
of such benefits reflects expected changes in such variables, based on past
history and other reliable evidence.

88. Assumptions about medical costs should take account of estimated
future changes in the cost of medical services, resulting from both inflation
and specific changes in medical costs.

89. Measurement of post-employment medical benefits requires
assumptions about the level and frequency of future claims and the cost
of meeting those claims. An enterprise estimates future medical costs on
the basis of historical data about the enterprise’s own experience,