Measuring defined benefit obligations - Assessing the financial impact and required disclosures

*Source SNG Grant Thornton

Please note that every effort has been made to ensure that the advice given in this educational material is correct. Nevertheless, that advice is given purely as guidance readers to assist them with particular problems relating to the subject matter of the educational material, and African Venture Group will have no responsibility to any person for any claim of any nature whatsoever that may arise out of, or relate to, the contents of this educational material.

Measuring defined benefit obligations

Measuring a defined benefit obligation involves making estimates and the use of assumptions (eg the appropriate interest rate, future salary increases and employee turnover). Given the sudden fall in markets and the decline in high quality corporate bond rates that have occurred as a result of COVID-19, an entity should consider the impact on its defined benefit obligation(s).


Most entities obtain full actuarial valuations approximately once every three years or as required by their regulator. In between, their actuary may perform a more limited update to roll forward the figures for financial reporting purposes, although an up-to-date valuation of plan assets is normally required at each reporting date. Management should consider whether the estimate needs to be adjusted, or a more comprehensive valuation obtained, as a result of the impact of COVID-19.


Entities should have discussions with their actuaries, to ascertain whether COVID-19 has impacted any assumptions in their reports such that their estimates may need to be revisited. The guidance related to subsequent events on whether there may be an adjusting or non-adjusting event should also be considered.

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