doc__table__771

| 106 | The expected return on plan assets is based on market expectations, at the beginning of the period, for returns over the entire life of the related obligation. The expected return on plan assets reflects changes in the fair value of plan assets held during the period as a result of actual contributions paid into the fund and actual benefits paid out of the fund. Example illustrating paragraph 106 At 1 January 20X1, the fair value of plan assets was 10 000 and net cumulative unrecognised actuarial gains were 760. On 30 June 20X1, the plan paid benefits of 1 900 and received contributions of 4 900. At 31 December 20X1, the fair value of plan assets was 15 000 and the present value of the defined benefit obligation was 14 792. Actuarial losses on the obligation for 20X1 were 60. At 1 January 20X1, the reporting entity made the following estimates, based on market prices at that date: % Interest and dividend income, after tax payable by the fund 9,25 Realised and unrealised gains on plan assets (after tax) 2,00 Administration costs (1,00 ) Expected rate of return 10,25 For 20X1, the expected and actual return on plan assets are as follows: Return on 10 000 held for 12 months at 10,25 % 1 025 Return on 3 000 held for six months at 5 % (equivalent to 10,25 % annually, compounded every six months) 150 Expected return on plan assets for 20X1 1 175 Fair value of plan assets at 31 December 20X1 15 000 Less fair value of plan assets at 1 January 20X1 (10 000 ) Less contributions received (4 900 ) Add benefits paid 1 900 Actual return on plan assets 2 000 The difference between the expected return on plan assets (1 175) and the actual return on plan assets (2 000) is an actuarial gain of 825. Therefore, the cumulative net unrecognised actuarial gains are 1 525 (760 plus 825 less 60). Under paragraph 92, the limits of the corridor are set at 1 500 (greater of: (i) 10 % of 15 000 and (ii) 10 % of 14 792). In the following year (20X2), the entity recognises in the income statement an actuarial gain of 25 (1 525 less 1 500) divided by the expected average remaining working life of the employees concerned. The expected return on plan assets for 20X2 will be based on market expectations at 1/1/X2 for returns over the entire life of the obligation.

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Source: EUR-Lex (Cellar) · retrieved 2026-11-08 · Text as adopted (Official Journal); later amendments are not incorporated in this text.