The amendments introduce a relief that will reduce the complexity and burden of accounting for certain contributions from employees or third parties.
Such contributions are eligible for the practical expedient if they are:
- set out in the formal terms of the plan
- linked to service and
- independent of the number of years of service.
When contributions are eligible for the practical expedient, a company is permitted (but not required) to recognise them as a reduction of the service cost in the period in which the related service is rendered.