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IAS 19 in Austria: who applies it and how severance pay (Abfertigung) and jubilee payments (Jubiläumsgeld) are measured

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In brief

In Austria, IAS 19 Employee Benefits is applied in consolidated financial statements under IFRS: parent companies required to do so by Art. 4 of Regulation (EC) No 1606/2002 must prepare them under IFRS, and other parent companies may (§ 245a UGB). Post-employment benefits and other long-term benefits such as jubilee payments (Jubiläumsgelder) are measured using the projected unit credit method (IAS 19.67, for other long-term benefits through IAS 19.155). AFRAC 27 understands severance payments as those types of benefit of the old severance system (Abfertigung alt) that are post-employment benefits, and permits this method in financial statements under UGB as well.

IFRS
consolidated financial statements, § 245a UGB
Method
projected unit credit, IAS 19.67
Discount rate
high quality corporate bonds, IAS 19.83
Jubilee payments
other long-term employee benefit, IAS 19.153

On this page

This is an English translation of the Austrian guide IAS 19 in Österreich. Quotations from Austrian sources are our translation; IAS 19 is quoted from its official English text.

Who applies IAS 19

Under § 245a(1) UGB, a parent company that is required to do so by Art. 4 of Regulation (EC) No 1606/2002 prepares its consolidated financial statements under the adopted international accounting standards. Art. 4 covers companies whose securities, at their balance sheet date, are admitted to trading on a regulated market of any member state. A parent company not covered by it “may prepare its consolidated financial statements under the accounting rules in subsection 1” (§ 245a(2) UGB).

“This Standard shall be applied by an employer in accounting for all employee benefits, except those to which IFRS 2 Share-based Payment applies” (paragraph 2).

IAS 19 values in financial statements under UGB

For financial statements under UGB, AFRAC 27 permits two accrual methods, “(a) the entry age normal method (Teilwertverfahren) or (b) the method of current single premiums (Verfahren der laufenden Einmalprämien)” (para. 39; for severance payments and jubilee payments paras. 62 and 79). AFRAC concluded “that both using the values determined under IAS 19 for companies that prepare their consolidated financial statements under IFRS (and thereby avoid a double calculation) and continuing to apply the entry age normal method for companies that do not need values under IAS 19 have advantages” (explanatory notes on para. 39).

AFRAC 27 expressly names two differences:

  • Actuarial gains and losses: “Unlike the rules in IAS 19, under the UGB there is no option to recognise actuarial gains and losses outside the income statement” (explanatory notes on para. 39).
  • Discount rate: “The market interest rate at the balance sheet date corresponds in principle to the rate under IAS 19.83, except for the simplification, optional under the UGB, of setting the average remaining term at 15 years. This simplification is not provided for in IAS 19.83.” (explanatory notes on paras. 41 to 43)

Abfertigung and Jubiläumsgeld under IAS 19

“Post-employment benefits are employee benefits (other than termination benefits and short-term employee benefits) that are payable after the completion of employment” (paragraph 8). AFRAC 27: “Severance payments are to be understood as those types of benefit of the ‘Abfertigung alt’ that are post-employment benefits”; on this, AFRAC 27 refers to AFRAC statement 20 “Treatment of the ‘Abfertigung alt’ under IAS 19, in particular the allocation of service cost” (explanatory notes on para. 5).

Other long-term employee benefits include “jubilee or other long-service benefits”, if they are not expected to be settled wholly before twelve months after the end of the annual reporting period in which the employees render the related service (paragraph 153(b)).

The difference lies in the recognition of remeasurements:

Post-employment benefitsOther long-term benefits (e.g. jubilee payments)
Service cost and net interestin profit or loss (paragraph 120(a) and (b))in profit or loss (paragraph 156)
Remeasurementsin other comprehensive income (paragraph 120(c))in profit or loss (paragraph 156)
for comparison: UGBevery change in value, except from use, transfer, business acquisition and the like, in profit or loss (AFRAC 27, para. 51 for pensions, para. 69 for severance payments)the same (AFRAC 27, para. 86)

The projected unit credit method

“An entity shall use the projected unit credit method to determine the present value of its defined benefit obligations and the related current service cost and, where applicable, past service cost” (paragraph 67). For other long-term benefits, paragraphs 56–98, among others, apply (paragraph 155). In the German version of the standard, the method is called “Methode der laufenden Einmalprämien”.

AFRAC 27: “The method of current single premiums is the method prescribed in IAS 19.67 and is also called the Anwartschaftsansammlungsverfahren or Anwartschaftsbarwertverfahren.” (explanatory notes on para. 39). The explanatory notes of the Federal Ministry of Finance on § 28 VRV 2015: “The term ‘Anwartschaftsbarwertverfahren’, also called the ‘projected unit credit method’, refers to a financial-mathematical measurement method based on international accounting standards.”

Accrual period for severance pay

In the explanatory notes on para. 61, AFRAC 27 restates the rule of AFRAC statement 20: “As the accrual period for severance payments on retirement, either the entire period of service from joining the company until reaching the statutory pension age, or the period from joining the company until the point from which further service no longer increases the entitlement (as a rule no more than 25 years of service), may be used.” For severance payments on death, on a pension for reduced capacity to work, on termination or resignation during parental leave and on termination by mutual agreement, “the accrual period in principle extends from the employee’s date of joining to the expected due date”.

Actuarial assumptions

“Actuarial assumptions are an entity’s best estimates of the variables that will determine the ultimate cost of providing post-employment benefits” (paragraph 76). They include, among others:

  • demographic assumptions: “mortality” and “rates of employee turnover, disability and early retirement”;
  • financial assumptions: “the discount rate” and “future salary”.

Discount rate (paragraph 83)

“The rate used to discount post-employment benefit obligations (both funded and unfunded) shall be determined by reference to market yields at the end of the reporting period on high quality corporate bonds. For currencies for which there is no deep market in such high quality corporate bonds, the market yields (at the end of the reporting period) on government bonds denominated in that currency shall be used.”

The recommendation of the Actuarial Association of Austria (AVÖ) as of 31 August 2026 and other published rates are on the page Rechnungszinssatz (in German).

Must an actuary do the calculation?

“This Standard encourages, but does not require, an entity to involve a qualified actuary in the measurement of all material post-employment benefit obligations” (paragraph 59).

“In some cases, estimates, averages and computational short cuts may provide a reliable approximation of the detailed computations illustrated in this Standard” (paragraph 60).

Sources

We calculate your employee benefit provision under IAS 19, UGB and VRV 2015.

Contact us:info@ias19.at