A plan change needs an event-date working, not only a year-end roll-forward
Ind AS 19 paragraphs 99–112 distinguish event-date remeasurement, past service cost and settlement. Checked on 28 October 2026 against ICAI's current compendium, this guide focuses on that plan-event procedure, rather than repeating the general actuarial valuation overview. Obtain before-and-after valuations on consistent current assumptions and current fair-value plan assets. The fictional figures are independently stipulated actuarial outputs; subtraction demonstrates the accounting bridge, not an actuarial valuation method. ICAI Ind AS 19, 2025–26: paragraphs 99–112 and event accounting.
Remeasure the old promise before measuring the changed promise
Paragraph 99 requires current actuarial assumptions, market interest rates/prices and fair-value assets when determining past service cost or settlement results, reflecting the position before and after the event. Separate experience/assumption remeasurement from the effect of amended benefits. Comparing a stale opening obligation directly with the amended obligation mixes different causes and can move an actuarial remeasurement into past service cost. Ask the actuary to label each movement and reconcile benefit terms and employee population. ICAI Ind AS 19, 2025–26: paragraphs 99–112 and event accounting.
Recognise the plan-amendment or curtailment effect correctly
Paragraph 102 defines past service cost by reference to the obligation change from amendment or curtailment. Paragraph 103 recognises it at the earlier of the event and recognition of related restructuring costs or termination benefits. An intention or budget is not by itself proof that the relevant recognition trigger has occurred. Positive and negative past service cost are possible. Paragraph 107 treats simultaneous reductions and increases for the same employees as one net change; separate presentations should not obscure that net effect. ICAI Ind AS 19, 2025–26: paragraphs 99–112 and event accounting.
Do not call every payout a settlement
Paragraphs 109–112 identify the settlement result and require elimination of the further legal/constructive obligation for the relevant benefits. Routine payments included in plan terms and actuarial assumptions are excluded from that settlement definition. Buying insurance is not automatically a settlement if the entity remains liable when the insurer fails to pay the promised benefits. Establish the remaining obligation from actual contractual and legal evidence, then compare the settlement-date obligation removed with the settlement price, including relevant assets transferred and direct payments. ICAI Ind AS 19, 2025–26: paragraphs 99–112 and event accounting.
Sequence related events and the asset ceiling
Paragraph 100 addresses events occurring together and recognises past service cost before a later settlement where amendment precedes it. Paragraph 101A requires measuring the stated past service/settlement effect without considering the asset ceiling, then determining the ceiling effect after the event and accounting for its change under paragraph 57(d). Do not net away a plan-change expense merely because an existing surplus was limited in the balance sheet. Full post-event current service cost and net-interest measurement also needs the relevant standard requirements; the examples isolate the specified event components. ICAI Ind AS 19, 2025–26: paragraphs 99–112 and event accounting.
Close profit, OCI, liability and cash separately
For the covered defined-benefit plan, distinguish service/settlement components from remeasurement presentation and do not equate a funding contribution with the expense. Reconcile the actuary's opening, pre-event, post-event and closing positions; retain the approval, communication, restructuring and settlement evidence supporting recognition dates. Taxes, later service, net interest, contributions and ordinary benefit payments are separate movements unless expressly included in a model. That separation lets a reviewer see both why the balance changed and which statement component records it. ICAI Ind AS 19, 2025–26: paragraphs 99–112 and event accounting.
Applicable primary references
ICAI Ind AS 19, 2025–26: paragraphs 99–112 and event accounting
Six worked illustrations
All facts and amounts below are fictional. Assumptions describe the model, not additional statutory rules.
Illustrative example 1: Positive past service cost
Current pre-amendment obligation is ₹1 crore and current post-amendment obligation ₹1.20 crore on aligned assumptions. Isolated past service cost is ₹20 lakh. It is not measured by the amount of this year's funding contribution.
Illustrative example 2: Negative past service cost
Assume a valid benefit reduction changes current obligation from ₹90 lakh to ₹80 lakh, with no other movement. The ₹10 lakh reduction is negative past service cost, subject to the standard's recognition and event evidence.
Illustrative example 3: Net simultaneous changes
For the same employees, one simultaneous benefit change increases obligation ₹8 lakh and another reduces it ₹5 lakh. The isolated net change is ₹3 lakh positive past service cost, rather than treating only the increase as the event's result.
Illustrative example 4: Settlement gain
Assume a qualifying settlement removes current obligation ₹50 lakh for a settlement price ₹44 lakh, including all relevant transferred assets/direct payments. Gain is ₹6 lakh. Retaining an obligation would require reassessing whether that settlement premise is met.
Illustrative example 5: Separate the pre-event remeasurement
Assume last recorded obligation ₹80 lakh remeasures to ₹85 lakh immediately before amendment, and amended obligation is ₹95 lakh; plan assets and other movements are zero in this model. Pre-event remeasurement loss is ₹5 lakh and past service cost ₹10 lakh. Total liability increase ₹15 lakh does not make all ₹15 lakh past service cost.
Illustrative example 6: Apply the earlier recognition date
Assume related restructuring costs are properly recognised on 10 September 2026 and the plan amendment occurs on 16 September. Paragraph 103's earlier date is 10 September, six days before the amendment. This assumes the stated restructuring recognition is valid; a preliminary budget alone would not establish that premise.
Ten-step verification table
| Step | Action | Evidence |
|---|---|---|
| 1 | Identify the actual plan event | Amendment, curtailment, settlement or ordinary payment |
| 2 | Establish benefit terms and population | Approved terms and employee coverage |
| 3 | Fix the relevant recognition dates | Event, restructuring and termination evidence |
| 4 | Obtain current pre-event measurement | Current assumptions and fair-value assets |
| 5 | Obtain aligned post-event measurement | Changed promises separated from assumption changes |
| 6 | Calculate past service cost | Positive/negative and simultaneous net changes |
| 7 | Test actual settlement status | Further obligations and contract/insurance terms |
| 8 | Compute the settlement price bridge | Obligation removed, assets transferred and direct payments |
| 9 | Review asset ceiling and later measurement | Paragraph 101A and independently applicable post-event rules |
| 10 | Close accounting presentation | Profit/OCI/liability/cash reconciliation and disclosures |
Sixteen practitioner FAQs
1. Is a year-end valuation always enough for a mid-year plan change?
Establish the event-date measurements required by the standard.
2. Should the old benefit promise use stale assumptions?
Paragraph 99 calls for current assumptions and asset values.
3. Is every obligation change past service cost?
No. Separate assumption/experience changes and other causes.
4. Can past service cost be negative?
Paragraph 106 expressly contemplates that.
5. How are simultaneous increases and reductions for the same employees treated?
Paragraph 107 uses a single net change.
6. What date governs past service cost?
The earlier of the event and the specified related-cost recognition.
7. Does an internal budget alone establish related restructuring recognition?
No. Verify the actual applicable recognition conditions.
8. Is every routine benefit payout a settlement?
Paragraph 111 excludes the specified ordinary plan payments.
9. What must a qualifying settlement eliminate?
The relevant further legal or constructive obligation.
10. Does every insurance purchase eliminate the obligation?
No. Review retained liability under paragraph 112.
11. What enters the settlement price?
The relevant transferred plan assets and direct payments, as specified.
12. Can amendment and settlement require sequencing?
Yes, paragraph 100 addresses that relationship.
13. Is the asset ceiling used to measure past service cost first?
Paragraph 101A requires the stated event measurement before considering that ceiling effect.
14. Is a funding contribution automatically the expense?
No. Cash funding and expense measurement differ.
15. Are these examples actuarial valuations?
No. They reconcile stipulated valid valuation outputs.
16. What completes the event file?
Aligned valuations, legal/approval evidence, timing and statement-component reconciliation.
Conclusion
Separate pre-event actuarial remeasurement from the plan-change effect, recognise past service cost at the required date, and calculate settlement gains without confusing them with cash funding.