What is Plan Assets?
Plan assets are assets set aside specifically to fund a defined benefit pension or post-employment benefit plan. Under IAS 19, they are measured at fair value and offset against the defined benefit obligation to determine the net pension asset or liability shown on the balance sheet.
How It Works
- Segregate assets from the employer’s general assets in a separate fund.
- Restrict their use to paying employee benefits.
- Measure them at fair value at each reporting date.
- Net them against the defined benefit obligation.
Saudi Context
Many Saudi corporates fund their end-of-service obligations through external investment portfolios managed by licensed asset managers, which qualify as plan assets under IAS 19.
Example
If a fund holds SAR 50 million in equities and bonds at fair value, and the defined benefit obligation is SAR 60 million, the company reports a net pension liability of SAR 10 million.