Alert: Exposure Draft – Proposed Section PS 3251 Employee Benefits (Jul 2021)

Date: July 28, 2021
Category: Alerts

Alert: Exposure Draft – Proposed Section PS 3251 Employee Benefits (Jul 2021)

In July 2021, the Public Sector Accounting Board (the “Board”) issued an Exposure Draft Employee Benefits, Proposed Section PS 3251 (the “ED”) The ED outlines principles for the first of several phases of a project to develop a revised employee benefits standard to replace Public Sector Accounting Standard (“PSAS”) Sections PS 3250, Retirement Benefits (“PS 3250”) and PS 3255, Post-Employment Benefits, Compensated Absences and Termination Benefits (“PS 3255”). This first ED focuses on deferral provisions and discount rate guidance.


The current PSAS guidance on retirement benefits and post-employment benefits, compensated absences, and termination benefits was developed more than two decades ago. Canadian pension and other post-employment and post-retirement plans have evolved significantly since that time. Through their Employee Benefits project, the Board intends to deliver a principles-based employee benefits standard that improves the understandability of financial reporting for employee benefits and provides financial statement users with better information. The project is also intended to result in employee benefits standards that are more closely aligned with International and other national standards.

This first ED focuses on proposed guidance for deferral provisions and discount rates. Principles from International Public Sector Accounting Standard (“IPSAS”) 39, Employment Benefits were used as a starting point, with adaptations as necessary to ensure alignment with PSAS Concepts and Principles.

The proposed changes

Deferral provisions

Under existing PS 3250 and PS 3255 actuarial gains and losses are deferred and amortized to the net defined benefit liability (asset) and the related expense in a systematic manner over the expected average remaining life of the related employee group.

The ED proposes a change to this approach, whereby revaluations of the net defined benefit liability (asset), including actuarial gains and losses, would be recognized immediately on the statement of position.

Discount rate

The ED proposes that the rate used to discount a post-employment benefit plan would depend on the plan’s funding status, which is the portion of the plan that is assessed to be sufficiently funded by existing plan assets.

Following the proposed guidance, in assessing the funding status of its post-employment benefit plan(s), a public sector entity would consider the following factors on an annual basis:

  • The proportion of the current and projected plan assets balance compared to projected benefit payments; and
  • The unique circumstances anc characteristics of their post-employment benefit plans.

Other proposed changes

Net interest on the net defined benefit liability (asset)

Net interest on a net defined benefit plan under the proposed ED would be determined by multiplying the net defined benefit liability (asset) by the rate used to discount the post-employment obligation.

Joint defined benefit plans

The Board has proposed minor modifications to the existing guidance for joint defined benefit plans. Existing references to ‘sponsor’ would be replaced with ‘participating entities’, and entities would be directed to use multi-employer plan guidance.


Though largely consistent with PS 3250 and PS 3255, there are certain, more detailed disclosures proposed under the ED, which are intended to improve the relevance and understandability of the information being provided.

Effective date

If adopted, the changes outlined in this ED would apply to financial statements prepared in accordance with PSAS for fiscal years beginning on or after April 1, 2026. The proposals will require retroactive transition, and earlier adoption will be permitted.

The deadline to provide comments to the Board on this ED is November 25, 2021.


Additional information about the Board’s project on Employee Benefits, is available here. Information about this ED, including related supporting materials, are provided here.

This communication contains a general overview of the topic and is current as of July 28, 2021. This information is not a substitute for professional advice and we recommend that any decisions you take about the application or not of any of the information presented be made in consultation with a qualified professional. Contact your local MNP representative for customized assistance with the application of this material. MNP LLP accepts no responsibility or liability for any loss related to any person's use of or reliance upon this material. © MNP LLP 2021. All rights reserved.

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Michelle Balmer CPA, CA

Vice President, Assurance

Michelle Balmer, CPA, CA, is a Senior Assurance Services Partner with MNP. With 14 years of experience in public practice, Michelle helps a broad range of public and privately held companies in a variety of industries. She also works on special projects, including costing studies, benchmarking and best-practice studies, operational analyses, litigation support and due diligence.

As a key member of MNP's Assurance team, Michelle has played an instrumental role in assurance policy development, implementing accounting and assurance standards firm-wide and educating assurance practitioners regarding methodologies and new pronouncements. She also provides technical advice and consultation on accounting and assurance issues, as well as on rules of professional conduct issues, to all MNP practitioners.

Michelle was certified a Chartered Accountant (CA) after obtaining a Bachelor of Commerce degree from the University of Alberta. She has been actively involved with the Institute of Chartered Accountants of Alberta, including the Chartered Accountants School of Business, in an instructional and marketing capacity. An avid volunteer, she has assisted numerous groups such as the Easter Seals of Alberta, Paralympic Sports Association and Junior Achievement of Northern Alberta.