Page 303 - Group Insurance and Retirement Benefit IC 83 E- Book

method required by paragraph 70 for the gross benefit (ie either using the plan’s
contribution formula or on a straight-line basis); or

(b) if the amount of the contributions is independent of the number of years of service, the
entity is permitted to recognise such contributions as a reduction of the service cost in
the period in which the related service is rendered. Examples of contributions that are
independent of the number of years of service include those that are a fixed percentage
of the employee’s salary, a fixed amount throughout the service period or dependent
on the employee’s age.

Appendix A provides related application guidance.

94 For contributions from employees or third parties that are attributed to periods of service in
accordance with paragraph 93(a), changes in the contributions result in:

(a) current and past service cost (if those changes are not set out in the formal terms of a plan and
do not arise from a constructive obligation); or

(b) actuarial gains and losses (if those changes s are set out in the formal terms of a plan, or arise
from a constructive obligation).

95 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 the best estimate of such variables,
based on historical data and other reliable evidence.

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

97 Measurement of post-employment medical benefits requires assumptions about the level and
frequency of future claims and the cost of meeting those claims. An entity estimates future medical
costs on the basis of historical data about the entity’s own experience, supplemented where
necessary by historical data from other entities, insurance companies, medical providers or other
sources. Estimates of future medical costs consider the effect of technological advances, changes in
health care utilisation or delivery patterns and changes in the health status of plan participants.

98 The level and frequency of claims is particularly sensitive to the age, health status and sex of
employees (and their dependants) and may be sensitive to other factors such as geographical
location. Therefore, historical data are adjusted to the extent that the demographic mix of the
population differs from that of the population used as a basis for the data. They are also adjusted
where there is reliable evidence that historical trends will not continue.

Past service cost and gains and losses on settlement

99 Before determining past service cost, or a gain or loss on settlement, an entity shall remeasure
the net defined benefit liability (asset) using the current fair value of plan assets and current
actuarial assumptions (including current market interest rates and other current market

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