1. AS-15 (REVISED 2005- EMPLOYEE'S BENEFITS)

2. BASIC PRINCIPLE
-Recognize the expenses of benefit to employees
during their service Period, which may be paid.
Currently,
On Retirement, or
Post Retirement

3. AS-15 (REVISED 2005- EMPLOYEE'S BENEFITS)
APPLICABILITY
With effect from accounting period commencing on or after
Level I Enterprises in entirety
Other than level I Enterprises para 11 to 16, 46
having 50 or more employees and 139 not applicable para 50 to 116 limited applicability
less than 50 employees do –
instead of actuarial valuation, some other method may be used.

4. -It Covers all employee Benefits as per –
SCOPE
-It Covers all employee Benefits as per –
Formal agreement
Legislative requirement
Informal practice
-It does not cover
Profit Sharing Plans &
Employee benefit Plans e.g., ESOP

5. -Short term employees Benefits:
NATURE OF BENEFITS
-Short term employees Benefits:
(payable within 12 months after providing Services)
- Wages, Salaries
- Leave Compensation
- Bonus
- Non Monetary Benefits
-Post Employment Benefits :
- Gratuity
- Pension/Superannuation
- Provident Fund
- Medical Facilities

6. ( Payable after 12 months of providing service) - Long Service Leaves
- Other long term Employee Benefits:
( Payable after 12 months of providing service)
- Long Service Leaves
- Bonuses
- Deferred Compensation
- Termination Benefits : Compensations and other benefits
on termination or pre mature
retirement.

7. Leaves : Fully Encashable - Full Provision
Short Term Employee Benefits
Salaries, wages and other non-monetary Benefits:
- To Account for in Current Period
- Not To Discount
Leaves : Fully Encashable - Full Provision
Lapsing No Provision
Accumulating Provision for
Expected Liabilities
Bonus : May be contingent upon future service
To provide for expected liability.

8. Post Employment Benefits
Defined Contribution Plans
Defined Benefit Plans

9. Defined Contribution Plans
Liability of Enterprise : Periodic Contribution
e.g. Provident Fund.
- On Retirement Employee gets : Accumulated
Contribution and
Appreciation of Fund.

10. Liability for Expense:
Defined Benefit Plans –
Benefit on Retirement or Post Retirement
- Expense to be provided during service period of
the employee.
Liability for Expense:
Unfunded Funded
- State Fund
- Trust Fund
- Insurance Fund
- Mutual Fund
( To Create Plan Asset)

11. Group Gratuity Scheme of Insurers
Whether Defined Contribution Plan ?
Whether it provides insurance cover? Or
It is only a plan Asset ?

12. Non Vesting Benefits also to be provided : e. g
Non Vesting Benefits also to be provided : e.g. Gratuity payable after completion of five year of service but to be provided from Ist Year

13. Defined Benefit Plans Estimation of liability of Benefits
: Using Actuarial assumptions
Discounting to Determine present Value (A)
: Using Projected Unit credit
Method.
Determine Fair Value of Plan Assets (B)
Difference of A-B to be carried in Balance Sheet as Defined Benefit Liability.

14. Defined Benefit Plans
Expenses to be provided in P&l Account to Constitute :
- Current Service Cost
- Interest Cost
- Expected Return on plan asset
- Actuarial gain or losses
- Past Service Cost
- Effect of any curtailment or settlement

15. Actuarial Assumptions
Demographic Mortality
- Employee Turnover
Financial Future Salary increase
- Discount rate
- Return on plan asset
- Medical Treatment Cost
- Change in cost of Medical Services
Discount rate to be as per return on Government
Bonds

16. Special Features of Revised AS-15
Disclosure of Different Components of cost to be charged to P& L Account.
Disclosure and break up of actuarial assumptions.
Discounting Rates as per yield on Government Bonds.
Actuarial Assumptions may be reviewed by Management/ Auditors.
Benefit Obligations and plan asset to be separately disclosed.
Management of plan assets is separately reflected.

17. Disclosures
Nature of Defined Benefit plans and effect of changes if any.
Break up and reconciliation of different components of defined benefit obligation.
Break up and reconciliation of different components or plan assets and return on assets.
Expenses recognized in P& L Account in different components.
Main Actuarial assumptions used.

18. Termination Benefits:
- To be Accounted for expenses immediately.
- VRS is a termination benefit.
- In case of VRS transitional provisions.

19. Transitional provisions: - Liability to be recognized as per revised
AS-15 as on , to be adjusted
against revenue reserves.
- Liability as per pre-revised AS- 15 shall be
prior period expense.
- VRS up to : After that in the year
of incurrence.

20. Population in excess of 1 Billion 35 States and Union Territories
24 Languages
7 Religions
3000 communities

21. INDIA Diversity in language, culture and religion
Does this diversity extend to employee benefits?
Yes & No

25. Overview of Employee Benefit Scenario In India
Employee Compensation
Salary
Allowances
& Bonus
Employee Benefits

26. Overview of Employee Benefit Scenario In India
Mandatory
Voluntary
Life Insurance
Leave Encashment
Provident Fund
Gratuity
Super-annuation
Personal Accident
Mediclaim

27. Employee Benefits – Insurance Co’s viewpoint
Retirement
Accident
Mediclaim
Life
Leave Encashment
Superannuation
Gratuity
Defined Benefit
Defined Contribution

28. Mediclaim Insurance Accident Insurance
Reimbursement of medical expenses following hospitalization
Cash less hospitalization facility available under certain plans
Tax deduction available for the business
Accident Insurance
Can offer compensation for any/all of the following:
Accidental death, disability
Medical expenses for treatment post accident
List of exclusions
BOTH BENEFITS ARE OFFERED BY NON-LIFE INSURANCE COMPANIES

29. Life Insurance – Trends
Benefit payable on accidental/natural death (limited exclusions)
Convenient eligibility conditions
Additional Optional riders
PROVIDED BY LIFE INSURANCE COMPANIES
Life Insurance – Trends
Monopoly of one single company so far
Increasing popularity amongst employers/ employees
General cover is about 3 to 5 times the gross annual salary
Companies with huge staff strength opt for profit-sharing

30. Leave Encashment –Defined benefit
For whom?
If company offers encashment of leave, all employees
What benefit?
Will be based on the company policy.
Normally x days salary for each accumulated day of leave
How Funded?
Institute of Chartered Accountants of India require that a provision be made for the liability.
No special tax benefits for self-funding through a trust
Insurance plans available to manage the funds

31. Gratuity – Defined Benefit
For whom?
Engaged in Factories, Mines, Plantations, Railways, Shops and establishments notified by Government
In service for 5 successive years
What benefit?
15 days wages for each year of service
Maximum limit Rs 3,50,000/
7 days wages per season for seasonal occupation
How Funded?
Can be funded our unfunded.
Special tax concessions if funded through a trust or insurance company

32. Superannuation – Defined Contribution/ benefit
For whom?
Non-mandatory, defined by company policy
What benefit?
Can be defined benefit(certain formula of last drawn salary) /defined contribution(certain %age of salary every month contributed to a fund)
Can be different for different grades
How Funded?
Can be funded our unfunded.
Special tax concessions if funded through a trust or insurance company

33. Retirement Benefits - Trends
Only one life insurance company in the market till 2000
Offered a cash-accumulation conventional scheme
More and more companies now funding through Insurance
Unit-linked – a preferred platform
Pensions benefits - from Defined Benefit to defined contribution

34. HDFC STANDARD LIFE INSURANCE
HDFC SL is Insurope’s network partner in India

35. Employee Benefits – Insurance Co’s viewpoint
Retirement
Accident
Mediclaim
Life
Leave Encashment
Superannuation
Gratuity
Defined Benefit
Defined Contribution

36. Employee Benefits – Insurance Co’s viewpoint
Retirement
Accident
Mediclaim
Life
Leave Encashment
Superannuation
Gratuity
Defined Benefit
Defined Contribution