Multi-employer Pension plans

IFRS: Multi-employer pension plans are defined contribution plans (other than state plans) or defined benefit plans (other than state plans) that:Time

  1. pool the assets contributed by various entities that are not under common control; and
  2. use those assets to provide benefits to employees of more than one entity, on the basis that contribution and benefit levels are determined without regard to the identity of the entity that employs the employees. Multi-employer Pension plans

Additional explanations

A multi-employer pension plan is a defined-benefit plan where two or more employers act as plan sponsors for their respective groups of employees. All of the employers contribute into a single pension fund, and the amount of these contributions is determined by legislation or one or more collective-bargaining agreements. Multi-employer Pension plans

The contributions are not necessarily equal, because the employee groups of each sponsor differ in number, average age, and so on. The contributions of each employer are pooled into one pension plan, with assets in the fund available to all pension recipients previously employed by any of the sponsors. Multi-employer Pension plans

This type of defined-benefit plan is most commonly found in the public sector, where the sponsors typically include a government and several other public-sector organizations. But also industry pension funds (for example building and construction industry or mining industry) exist that are more or less offering similar plans as public sector pension funds.Costs

Although multiple employers contribute to this type of plan, the responsibility to ensure that funding is sufficient to provide the benefits promised to employees ultimately rests with the sponsoring government or industry. As a result, accounting rules require the government sponsor to account for 100% of the plan like a standard defined-benefit plan. The co-sponsoring public organizations are only required to account for their contributions to the plan, as they would for a defined-contribution plan.

Something else -   Sponsor Accounting for a Pension Asset

But off-course the distribution of contributions to (co-)sponsors is a matter of continuous debate and co-sponsors may be requested to increase their average contributions when shortfalls or lower earnings occur. Because of the long-term nature of pensions in general small increase of pension charges over a long period of time to all sponsors are created, to establish trust in the system.

The main issues in these pension plans are the aging of participants and the low inflow of younger employees joining a pension plan over a significant part of their employed life.

Multi-employer Pension plans

Multi-employer Pension plans

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Something else -   Protective rights