Employee benefits include benefits provided to employees or their dependants or beneficiaries and may be settled by payments (or the provision of goods or services) made directly to the employees, their spouses, children, or other dependants or others, such as insurance companies. Defined benefit plans are post-employment benefit plans other than defined contribution plans.
Post-employment benefits include items such as the following:
(a) Retirement benefits (e.g. pensions and lump sum payments on retirement); and
(b) Other post-employment benefits, such as post-employment life insurance and post-employment medical care.
Further, Post-employment benefit plans can classified as either defined contribution plans or defined benefit plans, depending on the economic substance of the plan as derived from its principal terms and conditions.
In this story, we have discussed the accounting treatment for a company’s Liability towards the Social Security Scheme Fund as per the requirements of Ind AS 19, ‘Employee Benefits. Where the company formed the Social Security Scheme to provide specific financial assistance to dependent family members of the employee who dies during the service period and contribute a fixed amount annually, apart from the employee contribution, including any shortfall in the Trust fund during settlement of liability. To know whether such social security scheme trust fund qualifies as a DCP or DBP, click the below link.
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