IAS 26

IAS 26 is an International Accounting Standard issued by the International Accounting Standards Board (IASB) that specifies the measurement and disclosure requirements for the reports of retirement benefit plans.^[1] It complements IAS 19 Employee Benefits, which deals with how employers report the costs of such plans in their own financial statements.^[2]

Scope

IAS 26 applies to the reports of retirement benefit plans where such reports are prepared. It regards a retirement benefit plan as a reporting entity separate from the employers of the participants in the plan.^[3] All other IFRS standards apply to the reports of retirement benefit plans to the extent that they are not superseded by IAS 26.^[4]

Types of Plans

The standard distinguishes between two primary types of retirement benefit plans, each with different reporting requirements:^[5]

Defined Contribution Plans

In a defined contribution plan, the amount of future benefits is determined by the contributions paid by the employer and/or the employee, along with the investment earnings of the plan. The report of a defined contribution plan should contain:^[6]

• A statement of net assets available for benefits.
• A description of the funding policy.

Defined Benefit Plans

In a defined benefit plan, the amount to be paid as a retirement benefit is determined by a formula, usually based on employees' earnings and/or years of service. The report must provide information about the actuarial present value of promised retirement benefits, which can be presented in one of three ways:^[7]

1. In the statement of net assets available for benefits (showing the surplus or deficit).
2. In a note to the financial statements.
3. In a separate actuarial report accompanying the financial statements.

Valuation of Plan Assets

IAS 26 requires that retirement benefit plan investments be carried at fair value. In the case of marketable securities, fair value is usually market value.^[8] If an estimate of fair value is not possible, the reason why fair value is not used must be disclosed.^[9]

IAS 26 Reporting Comparison

Feature	Defined Contribution Plan	Defined Benefit Plan
Primary Goal	Reporting of investment performance and net assets.	Reporting of net assets and the ability to meet promised benefits.
Actuarial Info	Not required.	Required (Actuarial present value of promised benefits).
Asset Valuation	Fair Value.	Fair Value.

Disclosure Requirements

The report of a retirement benefit plan, whether defined benefit or defined contribution, should also include the following information:^[10]

• A statement of changes in net assets available for benefits.
• A summary of significant accounting policies.
• A description of the plan and the effect of any changes in the plan during the period.
• A description of the investment policy.

Current Status and Relationship with IAS 19

As of 2025, IAS 26 remains an effective and active standard within the IFRS framework. While it has been in place since 1988, it continues to serve as the primary guidance for the financial reporting of retirement benefit entities.

It is important to distinguish IAS 26 from IAS 19 Employee Benefits:

• IAS 19 is applied by the employer (the company) to account for the cost and obligations of providing pensions to its employees.
• IAS 26 is applied by the retirement benefit plan itself (the pension fund) as a separate reporting entity.

Consequently, a company will report its pension liabilities under IAS 19, while the independent fund managing those assets will issue its own financial statements in accordance with IAS 26.^[11]