By Riley Turnbull, CPA, CA

Riley Turnbull, CPA, CA is a Principal at the Public Sector Accounting Board (PSAB). Her work focuses on supporting PSAB and its volunteers in the development of public sector accounting standards. Riley is currently leading PSAB’s Employee Benefits project.”

On July 28, 2021, Canada’s Public Sector Accounting Board (PSAB) issued its Exposure Draft “Employee Benefits, Proposed Section PS 3251” for public comment.  

The Exposure Draft outlines the principles for the first phase of PSAB’s revised employee benefits standard. In this first phase, PSAB used principles from IPSAS 39 as starting point for the development of the proposed standard and focused its discussions on the topics of discount rate and deferral provisions. While the Exposure Draft focuses on finalizing guidance for discount rate and deferral provisions, the multi-phase approach to this project is intended to allow further revision of the proposed guidance, as non-traditional pension plans and other topics are considered in future phases.

The Need for A New Employee Benefits Standard 

Canadian pension plans have evolved significantly over the past two decades since current Sections PS 3250, Retirement Benefits, and PS 3255, Post-employment benefits, compensated absences and termination benefits, were developed. 

International and other national standard setters have issued updated guidance in response to changes in global pension plans. Through its Employee Benefits project, PSAB will deliver a principles-based employee benefits standard that addresses current and emerging key issues faced by Canadians and public sector plans. 

What Are the Key Proposals for Discount Rate and Deferral Provisions in Phase 1?

Under the proposed principles of the Exposure Draft, revaluations of the net defined benefit liability (asset) are recognized immediately on the statement of financial position. It is proposed that the other side of the entry will go to the accumulated other component of net assets, without subsequent reclassification to surplus or deficit, meaning that there is no impact on the statement of operations. 

PSAB also proposes that a public sector entity would assess the funding status of a post-employment benefit plan to determine the appropriate discount rate. 

What About Other Topics or Issues?

While the Exposure Draft focuses on finalizing proposed principles for discount rate and deferral provisions, the multi-phase approach to this project is intended to allow for further revision of the proposed guidance, as additional topics, such as non-traditional pension plans, are considered. 

PSAB wants to hear from you 

By reading and responding to these documents for comment, you can make your opinions heard. Please provide comments by November 25, 2021. 

Visit our new online community platform, connect.FRASCanada.ca, to respond to the proposals quickly and easily or ask further questions. 

For more information, visit the Employee Benefits project page.