Measure each plan before testing offset
Ind AS 19 paragraph 131 permits and requires offsetting an asset relating to one plan against another plan's liability only when its two conditions are met. The entity needs a legally enforceable right to use one surplus for the other obligation and the specified intention to settle net or realise the surplus and settle simultaneously. A spreadsheet net deficit alone does not establish either condition. ICAI Ind AS 19: paragraph 131 cross-plan offsetting.
Do not offset an unrecognised economic surplus
Start with separately measured recognised plan balances, including any applicable asset-ceiling analysis. Cash or investments held by a fund are not automatically an asset freely available to the employer. The presentation test does not create a new reimbursement right, remove restrictions or authorise a larger recognised asset. The numerical models stipulate valid recognised amounts so that they isolate offsetting. ICAI Ind AS 19: paragraph 131 cross-plan offsetting.
Support the legal right with the actual plan framework
Review the relevant trust, plan and legal documents and obtain advice where needed on enforceability. A common employer, trustee or investment manager does not itself prove that one surplus can satisfy another plan's obligations. Our recommended file records the source and scope of the asserted right and any restrictions rather than treating consolidated actuarial reporting as legal authority. ICAI Ind AS 19: paragraph 131 cross-plan offsetting.
Document intention separately from capability
The legal capacity to transfer a surplus is not the same as an intention to settle net or simultaneously. Keep the approved settlement plan and operational evidence with the legal analysis. A general aim to reduce future funding expense is not automatically the specified intention. If dates change, reassess the conclusion instead of retaining a net presentation solely because last year's file used one. ICAI Ind AS 19: paragraph 131 cross-plan offsetting.
Respect plan boundaries in the reconciliation
Maintain a matrix showing which recognised asset and liability are covered by a supported right and settlement intention. Do not use a qualifying pair to net a third unrelated liability. Offsetting affects presentation; it does not erase the underlying gross plan histories, risks or disclosures. Keep the gross-to-net bridge available even where an offset is supported. ICAI Ind AS 19: paragraph 131 cross-plan offsetting.
Close the presentation review without arbitrary netting
Use a consistent sign convention: positive amounts below denote liabilities and recognised assets are shown separately. All amounts are lakh rupees, with no foreign-currency, tax or asset-ceiling recalculation in the models. The examples assume the stated rights and intentions are established facts; they do not offer legal findings for any actual plan or imply that two plans are interchangeable funding pools. ICAI Ind AS 19: paragraph 131 cross-plan offsetting.
Applicable primary references
ICAI Ind AS 19: paragraph 131 cross-plan offsetting
Six worked illustrations
All facts and amounts below are fictional. Assumptions describe the model, not additional statutory rules.
Illustrative example 1: No enforceable right
Recognised Plan A asset is ₹12 lakh and Plan B liability ₹20 lakh. With no qualifying enforceable right, present the ₹12 lakh asset and ₹20 lakh liability separately. Their arithmetic difference is ₹8 lakh, but that does not authorise showing only an ₹8 lakh liability.
Illustrative example 2: Right but no qualifying intention
The same ₹12 lakh asset and ₹20 lakh liability are subject to an enforceable right, but the required net or simultaneous settlement intention is absent. Both conditions are necessary; gross presentation remains ₹12 lakh asset and ₹20 lakh liability, not the ₹8 lakh difference alone.
Illustrative example 3: Both tests met
Assume both paragraph 131 conditions are established for Plan A's recognised ₹12 lakh asset and Plan B's ₹20 lakh liability. The supported offset presentation is a net ₹8 lakh liability. The gross working still retains the original ₹12 lakh and ₹20 lakh balances.
Illustrative example 4: Net recognised asset
Assume both conditions are established for a recognised asset of ₹25 lakh and liability of ₹10 lakh. The arithmetic net presentation is a ₹15 lakh asset. Recognition of the ₹25 lakh asset, including any ceiling effects, is an express starting assumption and is not created by offsetting.
Illustrative example 5: Third plan outside the supported pair
Plans A and B qualify for offset, with an ₹8 lakh asset and ₹13 lakh liability, giving ₹5 lakh net liability. Plan C has a separate ₹7 lakh liability and is outside the supported right. Total presented liabilities are ₹12 lakh, but the bridge retains the ₹5 lakh paired amount and separate ₹7 lakh C balance rather than claiming all three plans form one qualifying pool.
Illustrative example 6: Change in the presentation conclusion
A prior supported pair had ₹10 lakh asset and ₹18 lakh liability, presented net at ₹8 lakh. At the current reporting date the balances remain the same but the qualifying settlement intention no longer exists. Current presentation becomes ₹10 lakh asset and ₹18 lakh liability: both gross sides increase by ₹10 lakh compared with the prior net presentation, without an ₹10 lakh expense being created merely by that display change.
Ten-step verification table
| Step | Action | Evidence |
|---|---|---|
| 1 | Identify each plan | Retain plan boundaries and the entity reporting perspective. |
| 2 | Validate recognised balances | Tie measured assets and liabilities to supported plan workings. |
| 3 | Review asset restrictions | Confirm any ceiling and recognition issues before netting. |
| 4 | Identify the proposed pair | State which asset is proposed against which liability. |
| 5 | Prove the legal right | Retain actual documents and enforceability analysis. |
| 6 | Prove the settlement intention | Keep the supported net or simultaneous settlement plan. |
| 7 | Review exclusions | Keep unrelated plans outside the qualifying pair. |
| 8 | Calculate presentation | Prepare the gross-to-net bridge with a consistent sign convention. |
| 9 | Reassess changes | Review new restrictions, dates or changed intentions at the reporting date. |
| 10 | Approve notes and ledger mapping | Preserve gross histories and required disclosures alongside the presentation result. |
Sixteen practitioner FAQs
1. Does an arithmetic net surplus prove offset eligibility?
No. Establish both paragraph 131 conditions.
2. Is a common employer sufficient?
Not by itself. Review the legal right and intention.
3. Is a common trustee sufficient?
Not by itself. Use the actual plan and legal documents.
4. Can an unrecognised surplus be offset?
First determine the valid recognised asset and any ceiling effect.
5. Does offsetting create a refund right?
No. It is not a substitute for the underlying recognition and legal analysis.
6. Does a legal right alone complete the test?
No. The specified settlement intention is also required.
7. Does intention alone complete it?
No. The enforceable right is also necessary.
8. What settlement intention is relevant?
Net settlement or realisation of the surplus and settlement of the other obligation simultaneously.
9. Can a general funding preference prove that intention?
Do not assume so without the required supported conclusion.
10. Can a third plan automatically join a qualifying pair?
No. Review its own relevant rights and presentation basis.
11. Should gross plan records disappear after offset?
No. Retain their histories and a reproducible gross-to-net bridge.
12. Does net presentation resolve every disclosure requirement?
No. Review the applicable notes and risks separately.
13. Can qualifying facts change between reporting dates?
Yes. Reassess rights, restrictions and intention.
14. Does loss of net presentation itself create an expense?
Not merely from grossing up the display, as the stipulated model illustrates.
15. Do the examples establish asset-ceiling amounts?
No. Valid recognised assets are explicit assumptions.
16. What should the reviewer reproduce?
Recognised balances, both qualifying tests, excluded plans and the final presentation bridge.
Conclusion
A surplus in one benefit plan does not automatically offset another plan’s liability. Paragraph 131 requires both an enforceable right and the specified settlement intention.