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IAS 19 Employee Benefits in Poland: who applies it and how retirement severance pay and jubilee awards are measured

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In brief

IAS 19 Employee Benefits (text in EUR-Lex, annex to Commission Regulation (EU) 2023/1803) is applied by entities that prepare financial statements under IAS/IFRS: the consolidated financial statements of issuers covered by Art. 4 of Regulation (EC) No 1606/2002 and of banks are prepared under IAS/IFRS (art. 55(5) of the Polish Accounting Act), and among others issuers and entities in groups whose parent prepares consolidated financial statements under IAS/IFRS may also prepare their own financial statements under IAS/IFRS (art. 45(1a)–(1e)). IAS 19 lists lump sum payments on retirement among post-employment benefits and jubilee awards among other long-term employee benefits (paragraphs 5 and 153); both are measured using the projected unit credit method (paragraph 67, for other long-term benefits through paragraph 155). An entity applying KSR 6 also applies IAS 19 in measuring retirement and similar benefits, except that it always recognises gains and losses from actuarial remeasurement in the profit and loss account (KSR 6, point 4.7).

IAS/IFRS
consolidated: art. 55(5)–(7), entity: art. 45(1a)–(1e) of the Accounting Act
Method
projected unit credit (paragraph 67)
Discount rate
high quality corporate bonds; with no deep market in such bonds, government bonds (paragraph 83)
Jubilee awards
other long-term employee benefits (paragraph 153)

On this page

This is an English translation of the Polish guide MSR 19. Quotations from Polish sources are our translation; IAS 19 and the EU regulations are quoted from their official English text.

Who applies IAS 19

IAS 19 “shall be applied by an employer in accounting for all employee benefits, except those to which IFRS 2 Share-based Payment applies” (paragraph 2). “Entities preparing financial statements in accordance with International Accounting Standards, International Financial Reporting Standards and the related interpretations published in the form of European Commission regulations, hereinafter ‘IAS’, apply the provisions of the act and the implementing provisions issued under it to the extent not regulated by IAS” (art. 2(3) of the Accounting Act).

Consolidated financial statements (art. 55(5)–(8))

  • “The consolidated financial statements of issuers of securities referred to in Art. 4 of Regulation (EC) No 1606/2002 … and of banks are prepared in accordance with IAS” (para. 5).
  • The consolidated financial statements of issuers of securities intending to apply or applying for their admission to trading on one of the regulated markets of the countries of the European Economic Area (para. 6), and of lower-level parents in a group in which the higher-level parent prepares consolidated financial statements under IAS (para. 7), may be prepared under IAS.
  • In the cases of paras. 6 and 7, the approving body of the parent decides (para. 8).

The entity’s own financial statements (art. 45(1a)–(1e))

The following financial statements may be prepared under IAS:

  • those of issuers of securities admitted to trading on one of the regulated markets of the countries of the European Economic Area, and of issuers intending to apply or applying for such admission (para. 1a);
  • those of “entities belonging to a group in which the parent prepares consolidated financial statements in accordance with IAS” (para. 1b);
  • those of “entities that are taxpayers of the domestic top-up tax” (para. 1ba);
  • those of “branches of a foreign entrepreneur … if that entrepreneur prepares its financial statements in accordance with IAS” (para. 1e).

The approving body decides whether the entities under paras. 1a and 1b prepare their financial statements under IAS (para. 1c); it may also decide to stop applying IAS when the circumstances under paras. 1a–1ba cease (para. 1d).

Entities applying the Accounting Act and KSR 6

  • “In matters not regulated by the act, when adopting accounting policies, entities may apply the national accounting standards issued by the Accounting Standards Committee. If there is no relevant national standard, entities other than those listed in art. 2(3) may apply IAS” (art. 10(3) of the Accounting Act).
  • KSR 6: “In measuring retirement and similar benefits, the entity applies the provisions of IAS 19 ‘Employee Benefits’, except that gains and losses from actuarial remeasurement are always taken to the profit and loss account under other operating income or other operating expenses” (point 4.7).
  • KSR 7 considers a company that wants to recognise changes from the actuarial remeasurement of its retirement severance provision as under IAS 19, directly in equity (example 10a): “The solution provided for in IAS 19 should not be treated as an equivalent alternative to the solution provided for in KSR 6. The solution provided for in IAS 19 is not only inconsistent with the detailed solution given in the national accounting standards, but also contradicts the provisions of the act, which in art. 35d(2) provides for the effects of estimating provisions (and of their changes) to be shown solely and exclusively in the profit and loss account”.

The recognition, measurement and presentation of these provisions under KSR 6 are described on the page KSR 6.

Retirement severance pay and jubilee awards 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). Among them the standard lists “retirement benefits (eg pensions and lump sum payments on retirement)” (paragraph 5(b)(i)).
  • “Other long-term employee benefits are all employee benefits other than short-term employee benefits, post-employment benefits and termination benefits” (paragraph 8). They include “jubilee or other long-service benefits”, if 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: “Unlike the accounting required for post-employment benefits, this method does not recognise remeasurements in other comprehensive income” (paragraph 154).

Post-employment benefits (e.g. retirement severance pay)Other long-term employee benefits (e.g. jubilee awards)
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: KSR 6gains and losses from actuarial remeasurement always in the profit and loss account (point 4.7)the same (point 4.7)

Point 4.7 of KSR 6 was amended by resolution No. 3/2014 “to clarify that gains or losses from the actuarial remeasurement of all provisions for long-term employee benefits are recognised in the profit and loss account” (§ 2(1) of the resolution).

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). “Defined benefit plans are post-employment benefit plans other than defined contribution plans” (paragraph 8). For other long-term employee benefits, “an entity shall apply paragraphs 56–98 and 113–115” (paragraph 155). The official Polish text calls the method “metoda prognozowanych uprawnień jednostkowych”.

  • Units of benefit entitlement. The method “sees each period of service as giving rise to an additional unit of benefit entitlement (see paragraphs 70–74) and measures each unit separately to build up the final obligation (see paragraphs 75–98)” (paragraph 68).
  • Attribution to periods of service. An entity “shall attribute benefit to periods of service under the plan’s benefit formula. However, if an employee’s service in later years will lead to a materially higher level of benefit than in earlier years, an entity shall attribute benefit on a straight-line basis”: from the date when service by the employee first leads to benefits under the plan until the date when further service will lead to no material amount of further benefits under the plan, other than from further salary increases (paragraph 70).
  • End of accrual. “The obligation increases until the date when further service by the employee will lead to no material amount of further benefits. Therefore, all benefit is attributed to periods ending on or before that date” (paragraph 73).

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 currency and term of the corporate bonds or government bonds shall be consistent with the currency and estimated term of the post-employment benefit obligations.”

Under KSR 6 the discount rate is set on the basis of “market yields on high-quality corporate bonds or market yields on government bonds, depending on the choice made by the entity in its accounting policies” (point 4.10).

Selected official data on interest rates, wages, inflation, mortality and the pension age are on the page Założenia aktuarialne (in Polish).

Must an actuary carry out the valuation?

IAS 19 does not require it: “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).

The text of IAS 19 and its amendments

  • Regulation. IAS 19 is in the annex to Commission Regulation (EU) 2023/1803 adopting certain international accounting standards in accordance with Regulation (EC) No 1606/2002 (OJ L 237, 26.9.2023, p. 1). EUR-Lex provides it in HTML and PDF. “Regulation (EC) No 1126/2008 is repealed. References to the repealed Regulation shall be construed as references to this Regulation” (Article 4).
  • Amendments. Of the regulations amending Regulation 2023/1803, only Commission Regulation (EU) 2026/338 on IFRS 18 amends IAS 19: “Paragraphs 25, 134, 158 and 171 are amended. Paragraph 180 is added.” Each company applies these amendments “at the latest as from the commencement date of its first financial year starting on or after 1 January 2027” (Article 2 of Regulation 2026/338). The paragraphs quoted on this page are not affected. Status as of 28 October 2026.
  • Consolidated text. EUR-Lex also publishes a consolidated text of Regulation 2023/1803 (version of 8.3.2026): “This text is meant purely as a documentation tool and has no legal effect.”

Sources

We calculate your employee benefit provision under IAS 19 and the Polish Accounting Act.

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