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IAS 26

Accounting and Reporting by Retirement Benefit Plans

IAS 26 prescribes the accounting and reporting requirements for the financial statements of a retirement benefit plan itself, as a separate reporting entity distinct from the employers of the plan's participants, requiring plan investments to be reported at fair value and setting out the specific statements a defined contribution or defined benefit plan should present. [S1]

Effective 1988-01-01Related: IAS 19 · IFRS 13 · IFRS 7 · IAS 1

Overview

IAS 26 addresses a narrow but distinct reporting perspective: not the employer accounting for its obligation to provide retirement benefits (that is IAS 19), but the retirement benefit plan (the pension fund) itself, reporting to all its participants as a group on its own financial position, performance and investment activity. [S1] For a defined contribution plan, IAS 26 requires a statement of net assets available for benefits and a description of the funding policy; for a defined benefit plan, it additionally requires either an actuarial present value of promised retirement benefits (distinguishing vested and non-vested benefits) or a reference to that information in an accompanying actuarial report. [S2]

Why it matters

Plan participants, trustees, Pension Fund Administrators and regulators need to know whether a retirement fund actually holds enough assets, fairly valued, to meet the benefits it has promised or is expected to pay — a fundamentally different question from whether the sponsoring employer has correctly accounted for its own contribution obligation. IAS 26 exists because a pension fund is, in substance, an investment vehicle with obligations to its beneficiaries, and its financial statements need their own tailored disclosure regime focused on funding adequacy and investment performance, which IAS 19 (written from the employer's perspective) does not address.

Scope

Applies to the financial statements of retirement benefit plans where such financial statements are prepared; it applies to reports of retirement benefit plans to all participants as a group, not to individual participant benefit statements, and applies equally to funded and unfunded plans, whether they have separate legal identity and trustees or not. Where a retirement benefit plan also prepares other financial reports (for example, in accordance with other Standards) in addition to its IAS 26 report, this Standard is limited to the specific matters it addresses. IAS 26 complements IAS 19 rather than overlapping with it: IAS 19 is applied by the employer, and IAS 26 by the plan itself as a separate reporting entity.

Key definitions

term
Retirement benefit plan
definition
An arrangement whereby an entity provides benefits for employees on or after termination of service (either in the form of an annual income or as a lump sum), when such benefits can be determined or estimated in advance of retirement from the provisions of a document or from the entity's practices.
term
Defined contribution plans (IAS 26 perspective)
definition
Retirement benefit plans under which amounts to be paid as retirement benefits are determined by contributions to a fund together with investment earnings thereon.
term
Defined benefit plans (IAS 26 perspective)
definition
Retirement benefit plans under which amounts to be paid as retirement benefits are determined by reference to a formula usually based on employees' earnings and/or years of service.
term
Net assets available for benefits
definition
The assets of a plan less liabilities other than the actuarial present value of promised retirement benefits.
term
Actuarial present value of promised retirement benefits
definition
The present value of the expected payments by a retirement benefit plan to existing and past employees, attributable to the service already rendered.
term
Vested benefits
definition
Benefits, the rights to which, under the conditions of a retirement benefit plan, are not conditional on continued employment.

Recognition

For a defined contribution plan, the plan's report accounts for the net assets available for benefits and the changes in those net assets during the period, without needing actuarial assumptions about promised future benefits, since a participant's ultimate benefit is determined by contributions and investment returns rather than a defined formula. For a defined benefit plan, in addition to net assets available for benefits, the report either includes a statement of the actuarial present value of promised retirement benefits (based on the benefits promised under the terms of the plan on service rendered to date, using either current or projected salary levels) or refers to this information in an accompanying actuarial report, together with an indication of the relationship between the actuarial present value of promised benefits and the net assets available for benefits, and the policy for funding promised benefits.

Initial measurement

Not a distinct concept in the way it applies to a single transaction; a retirement benefit plan's investments are measured (from first recognition and throughout) at fair value, since fair value is considered the most relevant measure for assessing a plan's ability to meet its obligations and its investment performance for the period.

Subsequent measurement

Retirement benefit plan investments continue to be carried at fair value at each reporting date: for marketable securities, fair value is usually market value; for investments where fair value cannot be estimated (for example, certain specialist or illiquid investments), disclosure is made of the reason fair value is not used and of the measurement basis applied instead. The actuarial present value of promised retirement benefits for a defined benefit plan is periodically reassessed by an actuary (not necessarily annually, though frequent enough to keep the disclosed information current), and any significant changes since the last actuarial valuation are disclosed.

Presentation

A defined contribution plan presents a statement of net assets available for benefits and a description of the funding policy. A defined benefit plan presents either a statement of net assets available for benefits and a statement of the actuarial present value of promised retirement benefits (distinguishing vested and non-vested benefits), or a single statement or report including a statement of net assets available for benefits and either the actuarial present value of promised benefits or a reference to this information in an accompanying actuarial report; in all cases, an explanation of the relationship between the actuarial present value of promised benefits and the net assets available for benefits, and of the policy for funding promised benefits, is provided.

Disclosure checklist

  • A statement of changes in net assets available for benefits.
  • A summary of significant accounting policies, including the basis for determining fair value of plan investments.
  • A description of the plan and the effect of any changes in the plan during the period.
  • A description of the funding policy and, for a defined benefit plan, the relationship between the actuarial present value of promised benefits and the net assets available for benefits.
  • For plan investments for which fair value cannot be reliably estimated, disclosure of the reason and the measurement basis used instead.
  • Significant actuarial assumptions made and the method used to calculate the actuarial present value of promised retirement benefits, for a defined benefit plan.

Practical treatment

In practice, IAS 26 is applied by the pension fund or scheme itself (or its administrator preparing financial statements on the fund's behalf), not by the sponsoring employer, so the practical starting point is confirming which entity is actually preparing the financial statements in question: an employer's own financial statements never apply IAS 26, only IAS 19. For Nigerian Contributory Pension Scheme Retirement Savings Accounts administered by licensed Pension Fund Administrators, the individually managed, defined-contribution nature of the scheme means the IAS 26 defined contribution disclosure regime (net assets available for benefits and funding policy) is the relevant framework, rather than the more complex defined benefit actuarial present value disclosures, which are more relevant to legacy or occupational defined benefit schemes still operating in Nigeria outside the mandatory CPS. See nigeria_notes for further detail on how this plays out in the Nigerian regulatory environment.

Common mistakes

  • Applying IAS 26 to an employer's own financial statements, when IAS 26 is applied only by the retirement benefit plan itself as a separate reporting entity.
  • Presenting plan investments at cost rather than fair value, or failing to disclose the reason and alternative basis used where fair value genuinely cannot be estimated.
  • Omitting the required description of the relationship between the actuarial present value of promised benefits and net assets available for benefits for a defined benefit plan.
  • Failing to distinguish vested from non-vested benefits in the actuarial present value disclosure for a defined benefit plan.
  • Treating a Nigerian defined-contribution Retirement Savings Account structure as requiring the full defined benefit actuarial present value disclosure regime, when the simpler defined contribution disclosure requirements apply.

CFO checklist

  • Confirm whether IAS 26 applies at all: it is relevant only if the reporting entity is the retirement benefit plan itself, not the sponsoring employer.
  • For a defined contribution plan or scheme, ensure the statement of net assets available for benefits and funding policy description are prepared and current.
  • For a defined benefit plan, obtain and disclose (or reference) a current actuarial present value of promised benefits, distinguishing vested and non-vested amounts.
  • Confirm all plan investments are measured at fair value, with disclosed exceptions and reasons where fair value cannot be reliably estimated.
  • Coordinate with the plan's Pension Fund Administrator (for CPS-based Retirement Savings Accounts) or actuary (for defined benefit schemes) on the specific IAS 26 disclosures needed.
  • Distinguish IAS 26 plan-level reporting obligations from the sponsoring employer's separate IAS 19 obligations in engagement scoping.

FAQs

q
Does our company, as the employer, need to apply IAS 26?
a
No. IAS 26 is applied by the retirement benefit plan itself when it prepares its own financial statements as a separate reporting entity; the employer applies IAS 19 to account for its own obligation to contribute to or provide the plan's benefits, not IAS 26.
q
Do Nigerian Retirement Savings Accounts under the Contributory Pension Scheme need the full defined benefit IAS 26 disclosure package?
a
Generally no, since the CPS is structured as a defined contribution arrangement at the level of each individual Retirement Savings Account; the relevant IAS 26 disclosures are the simpler defined contribution requirements (statement of net assets available for benefits and funding policy description) rather than the actuarial present value of promised benefits required for defined benefit plans.
q
Can a plan disclose its actuarial present value of promised benefits by simply referencing an actuarial report rather than including the figures directly?
a
Yes. IAS 26 permits either including a statement of the actuarial present value of promised retirement benefits directly, or referencing this information in an accompanying actuarial report, provided that report is made available with the financial statements.

Nigeria application notes

Regulatory overlay

IAS 26 applies in full to Nigerian public interest entities under the FRCN Act 2011 mandate, to the extent a Nigerian retirement benefit plan prepares IAS 26 financial statements. [S3] The Pension Reform Act 2014 established the Contributory Pension Scheme, regulated by the National Pension Commission (PenCom), under which Pension Fund Administrators manage individually held Retirement Savings Accounts and Pension Fund Custodians hold the underlying assets; PenCom's own regulatory reporting framework for licensed operators sits alongside, and in some respects informs, the IAS 26 reporting perspective for these plans. [S4][S6]

Tax interaction (Nigeria)

Retirement Savings Account balances and approved pension scheme assets generally benefit from favourable tax treatment under Nigerian law (for example, income and capital gains within an approved pension fund are typically exempt from tax, and contributions within statutory limits are deductible for the contributor), though the specific tax treatment of a plan's investment income and gains should be confirmed against current Nigeria Tax Act 2025 and PenCom-approved scheme rules rather than assumed uniformly across all retirement arrangements. [S5][S_TAX1] Nigerian rates, thresholds, exemptions, incentives and filing rules referenced in this file (including CIT, VAT, pension contribution rates, and the small-company threshold) should be independently verified against the Nigeria Tax Act 2025, the Nigeria Tax Administration Act 2025, the Pension Reform Act 2014, PenCom guidance, and current NRS practice at the reporting or filing date, since thresholds, rates and reliefs are subject to periodic revision and to sector- or entity-specific qualifying conditions. This file does not constitute legal or tax advice. [S_TAX1][S_TAX2]

FX considerations

The 2025 introduction of Foreign Currency-Denominated Retirement Savings Accounts allows certain contributors (Nigerians working abroad, staff of international organisations in Nigeria) to hold pension assets denominated in foreign currency; where a Nigerian retirement benefit plan holds foreign-currency-denominated investments or liabilities, IAS 26's fair value measurement principle still applies, translated into the plan's own reporting currency using an appropriate, disclosed exchange rate basis, with naira volatility a relevant factor in assessing period-on-period changes in net assets available for benefits.

SME practical note

IAS 26 is rarely directly relevant to Outliers' typical Nigerian SME and corporate clients (who apply IAS 19 as employers, not IAS 26 as a plan), but is directly relevant to any client that is itself a Pension Fund Administrator, Pension Fund Custodian, or trustee of a legacy occupational retirement scheme preparing its own plan-level financial statements; Outliers recommends confirming early in any pension-sector engagement which perspective (employer under IAS 19, or plan under IAS 26) is actually being reported on, since the two are easily conflated.

Common Nigerian pitfalls

  • Confusing an employer's IAS 19 pension expense disclosure with the separate IAS 26 reporting obligations of the underlying Retirement Savings Account or Pension Fund Administrator.
  • Assuming all Nigerian retirement arrangements are structured as defined contribution CPS accounts, overlooking legacy occupational defined benefit schemes that may still require full IAS 26 defined benefit disclosure.
  • Not confirming the specific tax-exempt treatment of pension fund investment income against current rules before assuming a blanket exemption applies.
  • Overlooking the need to translate foreign-currency-denominated Retirement Savings Account balances using a consistent, disclosed exchange rate basis.

FRC pronouncements

No FRCN pronouncement specific to IAS 26 has been identified; the relevant Nigerian regulatory context for retirement benefit plan reporting is primarily PenCom's own regulatory framework for Pension Fund Administrators and Custodians, operating alongside FRCN's general IFRS compliance mandate. [S3][S4]

Worked examples

Statement of net assets available for benefits (defined contribution plan)

A Nigerian Pension Fund Administrator prepares IAS 26 financial statements for a pooled Retirement Savings Account fund. At the reporting date, the fund holds government bonds at a fair value of ₦3,000,000,000, listed equities at a fair value of ₦1,200,000,000, and cash of ₦300,000,000, with no liabilities other than a small ₦50,000,000 amount payable for pending withdrawals.

Facts

Workings

Total plan assets at fair value: 3,000,000,000 + 1,200,000,000 + 300,000,000 = 4,500,000,000

Net assets available for benefits: 4,500,000,000 - 50,000,000 = 4,450,000,000

Defined benefit plan disclosure of actuarial present value of promised benefits

A legacy Nigerian occupational defined benefit pension scheme (closed to new members) prepares its own IAS 26 financial statements. Net assets available for benefits at the reporting date are ₦1,800,000,000. The scheme actuary determines the actuarial present value of promised retirement benefits at ₦2,100,000,000, of which ₦1,900,000,000 relates to vested benefits and ₦200,000,000 to non-vested benefits.

Facts

Workings

Shortfall of net assets available for benefits against the actuarial present value of promised benefits: 2,100,000,000 - 1,800,000,000 = 300,000,000

This shortfall is a plan-level funding position disclosure under IAS 26, distinct from any liability the sponsoring employer might separately recognise under IAS 19 for its own obligation to the scheme.

Sources & citations

  1. [S1]IAS 26 Accounting and Reporting by Retirement Benefit Plans — IFRS Foundationaccessed 2026-07-18
  2. [S2]IAS 26 Accounting and Reporting by Retirement Benefit Plans — IFRSMasterclassaccessed 2026-07-18
  3. [S3]IFRS - Use of IFRS Standards by jurisdiction: Nigeria — IFRS Foundationaccessed 2026-07-18
  4. [S4]Frequently Asked Questions and Answers on the Contributory Pension Scheme — National Pension Commission (PenCom)accessed 2026-07-18
  5. [S5]Nigeria - Individual - Other taxes — PwC Worldwide Tax Summariesaccessed 2026-07-18
  6. [S6]Pension Reform Act 2014 signed into law — Lexologyaccessed 2026-07-18
  7. [S_TAX1]Nigeria Tax Act, 2025 has been signed – highlights — EY Globalaccessed 2026-07-18
  8. [S_TAX2]Nigeria's 2025 Tax Reform Acts Explained: Key Changes — Baker Tilly Nigeriaaccessed 2026-07-18
Last reviewed 2026-07-18 · Reviewer: Rafiu Olawuyi, FCA (Author / Technical Reviewer)