Many companies outside of the financial sector can be caught by surprise when they realize that they are obliged to create long-term provisions for their liabilities arising from certain employee benefits.
We can support these clients with a comprehensive solution to this issue. Our services include analysis of the relevant Collective Agreement, identification of the benefits for which IAS 19 requires the creation of long-term provisions, definition of the data needed for calculations, creation of the actuarial models, and production of the numbers required for disclosures under IFRS.
There are many benefit types, where the provision is required, and also different rules for how the benefit is determined. The following are examples of benefits we have already encountered:
- Life jubilee (with fixed or salary-based lump-sum payment or days off)
- Old-age retirement (with fixed or salary-based lump-sum payment)
- Working jubilee (working years within the company or working years overall, fixed or salary-based lump-sum payment, or days off)
- Disability retirement (fixed or salary-based lump-sum payment)
- Loss of working ability retirement (fixed or salary-based lump-sum payment)
- Marriage (fixed or salary-based lump-sum payment, extra days off)
- New child birth (fixed or salary-based lump sum payment, extra days off, additional payment to maternity allowance)
- Death benefit (payment to family members)
- Days off for convalescent stay
For this purpose, we have developed specialized tools, which we always tailor to each company.
Adjustments according to company needs are mainly in the following areas:
- Rules of benefit payments
- Disability degrees or loss of working ability
- Frequency of salary increase
- Type of employment (executive, non-executive, definite /indefinitely employed)
- Rules for old-age retirements (benefit is paid exactly at the old-age retirement age/benefit is paid at the moment of real retirement/benefit is paid at the moment of real retirement but not earlier than x months before/ not later than y months after the old-age retirement age)
- Specific requirements of the corresponding industry (metallurgy, firefighters, policemen etc.)
- Different scenarios setting (discount rates, benefit or salary indexation, mortality, turnover rates)