EBA launches discussion on the impact on the volatility of own funds of the accounting and prudential changes in the treatment of defined benefit pension plans

17 February 2014

The European Banking Authority (EBA) published today a discussion paper on the impact on the volatility of own funds of the revised International Accounting Standard for employee benefits (IAS 19) and the deduction of defined benefit pension assets from own funds in accordance with the Capital Requirements Regulation (CRR) . The input gathered from this discussion paper will assist or inform the EBA in the preparation of its report to the European Commission on this topic. The consultation runs until 14 April 2014.

This discussion paper gives the EBA's preliminary views based on:(i) a qualitative analysis of the accounting and prudential changes and their impact on the volatility of own funds, (ii) a quantitative analysis of this impact for a sample of EU institutions and (iii) a qualitative analysis of the factors that may impact the volatility of own funds in the future.

The discussion paper aims at gathering the stakeholders' input on this topic at an early stage of the process.

Following the outcome of this consultation, the EBA will deliver its report to the Commission by 30 June 2014.

Consultation process

Comments can be sent to the EBA by clicking on the "send your comments" button on the discussion page. Please note that the deadline for the submission of comments is 14 April 2014.

All contributions received will be published following the close of the consultation, unless requested otherwise.


The proposed discussion paper has been developed on the basis of Article 519 of Regulation (EU) No 575/2013 (Capital Requirements Regulation - CRR), where the EBA is mandated to prepare a report on the impact the revised IAS 19 and the deduction of net pension assets are likely to have on the volatility of institutions' own funds. Taking into account the EBA report, the Commission shall prepare by 31 December 2014 a report for the European Parliament and the Council on this issue and, if need be, put forward a legislative proposal to introduce a treatment to adjust defined net benefit pension fund assets or liabilities for the calculation of own funds.

Revised IAS 19 came into force on 1 January 2013 and eliminated the so-called "corridor approach" for measuring defined benefit plans. Article 36(1)(e) CRR includes the requirement for institutions to deduct from Common Equity Tier 1 net defined benefit pension assets.