In general terms, pension expense reported in the statement of profit or loss is driven by how much the pension liability increased during the year, net of returns on the plan’s assets. Normally, a pension liability increases as employees earn additional future benefits from an additional year of service, and as they get closer to collecting retirement benefits. These factors also increase the pension expense in the statement of profit or loss.
Plan assets increase with returns that the plan earns on its investments, reducing the pension expense reported in the statement of profit or loss.
The company’s annual pension expense consists of the following components:
|(- cost, + income)|
|Cost of benefits earned by employees in|
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