G4-EC3


Coverage of the organization's defined benefit plan obligations

  • Where the plan’s liabilities are met by the organization’s general resources, report the estimated value of those liabilities.

  • Where a separate fund exists to pay the plan’s pension liabilities, report:

    • The extent to which the scheme’s liabilities are estimated to be covered by the assets that have been set aside to meet them
    • The basis on which that estimate has been arrived at
    • When that estimate was made
  • ​Where a fund set up to pay the plan’s pension liabilities is not fully covered, explain the strategy, if any, adopted by the employer to work towards full coverage, and the timescale, if any, by which the employer hopes to achieve full coverage.

  • Report the percentage of salary contributed by employee or employer.

  • Report the level of participation in retirement plans (such as participation in mandatory or voluntary schemes, regional or country-based schemes, or those with financial impact).



​When an organization provides a retirement plan for its workforce, these benefits could become commitments that members of the schemes plan on for their long-term economic well-being. Defined benefit plans have potential implications for employers in terms of the obligations that need to be met. Other types of plans, like defined contributions, do not guarantee access to a retirement plan or the quality of benefits. The type of plan chosen has implications for both employees and employers. Conversely, a properly funded pension plan can help to attract and maintain a stable workforce and support long-term financial and strategic planning on the part of the employer.

​Identify whether the structure of retirement plans offered to employees are based on:

  • Defined benefit plans
  • Defined contribution plans
  • Other types of retirement benefits

For defined benefit plans, identify whether the employer’s obligations to pay pensions under the plan are to be met directly by the organization’s general resources or through a fund held and maintained separately from the resources of the organization.

Different jurisdictions (such as countries) have varying interpretations and guidance regarding calculations used to determine plan coverage. Calculate in accordance with the regulations and methods for relevant jurisdictions, and report aggregated totals. Consolidation techniques should be the same as those applied in preparing the financial accounts of the organization. Note that benefit pension plans are part of the IASB IAS 19 Employee Benefits (16), however, IAS 19 covers more issues.

​Potential sources of information include the organization’s finance or accounting departments.

  • ​International Accounting Standards Board (IASB), IAS 19 Employee Benefits, 2001.