ASBE No. 10
Active
Enterprise Annuity Fund
Enterprise Annuity Fund is part of the Chinese Accounting Standards for Business Enterprises (ASBE).
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Conceptual Framework Linkage
Accounting for the pension vehicle, not the sponsoring employer
ASBE No. 10 governs the RECOGNITION, MEASUREMENT, and PRESENTATION of financial STATEMENTS for an "ENTERPRISE ANNUITY FUND" (企业年金基金) – a VOLUNTARY, SUPPLEMENTARY occupational PENSION vehicle Chinese ENTERPRISES may ESTABLISH in ADDITION to the MANDATORY state BASIC pension INSURANCE system (see the COMPANION ASBE No. 9 poster). GENUINELY DISTINCTIVELY, this Standard addresses the FUND'S OWN separate ACCOUNTING – NOT the sponsoring EMPLOYER'S contribution EXPENSE, which is SIMPLY treated as an ORDINARY employee BENEFIT cost under ASBE No. 9.
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Scope – the Fund's Own Financial Statements
A dedicated reporting entity, separate from the employer
This Standard applies to the ENTERPRISE ANNUITY FUND ITSELF – a SEGREGATED, TRUSTEE-managed POOL of assets HELD for the BENEFIT of PARTICIPATING employees – REQUIRING its OWN set of FINANCIAL statements, DISTINCT from BOTH the SPONSORING employer's statements AND the INDIVIDUAL participating EMPLOYEE'S own position.
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What an Enterprise Annuity Is
A voluntary "third pillar" supplement to the mandatory state pension
An "ENTERPRISE ANNUITY" is a VOLUNTARY OCCUPATIONAL pension ARRANGEMENT some Chinese ENTERPRISES establish to SUPPLEMENT the MANDATORY state BASIC pension SYSTEM – BROADLY analogous to a "THIRD PILLAR" or SUPPLEMENTARY workplace PENSION scheme INTERNATIONALLY, FUNDED through JOINT employer/employee CONTRIBUTIONS, MANAGED by INDEPENDENT trustees or FUND managers on the PARTICIPANTS' behalf.
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Distinguishing This Standard From ASBE No. 9
Two entirely different accounting questions
ASBE No. 9 addresses HOW the SPONSORING employer ACCOUNTS for its OWN contribution EXPENSE (a STRAIGHTFORWARD periodic COST, much like the STATE pension SYSTEM'S own treatment). ASBE No. 10, BY CONTRAST, addresses an ENTIRELY DIFFERENT question: HOW the FUND ITSELF – as a SEPARATE reporting ENTITY holding and INVESTING the POOLED contributions – RECOGNISES and MEASURES its OWN assets, LIABILITIES, and NET assets AVAILABLE for BENEFITS.
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Measurement of Fund Assets – Fair Value Throughout
Financial assets measured at fair value, with changes in profit or loss
FINANCIAL assets OBTAINED by an ENTERPRISE annuity FUND are MEASURED at FAIR VALUE, with CHANGES between the CARRYING amount and the FAIR value RECOGNISED in PROFIT or LOSS – a GENUINELY notable EXCEPTION to the GENERAL cost-model CAUTION seen ELSEWHERE across the ASBE asset STANDARDS (Fixed Assets, INVESTMENT Property, BIOLOGICAL Assets – see the COMPANION posters), REFLECTING the FUND'S fundamentally INVESTMENT-oriented purpose.
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The Fund's Financial Statements
A statement of net assets available for benefits
The FUND prepares its OWN financial STATEMENTS – PRINCIPALLY a STATEMENT of NET assets AVAILABLE for BENEFITS, and a STATEMENT of CHANGES in NET assets AVAILABLE for BENEFITS – SHOWING contributions RECEIVED, investment INCOME earned, benefit PAYMENTS made, and the FUND'S overall NET asset POSITION, WITHOUT attempting to VALUE the participants' INDIVIDUAL accrued PENSION entitlements (a SEPARATE actuarial QUESTION beyond this Standard's SCOPE).
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A Genuinely Rare Standard-Level Treatment Internationally
A dedicated standard for a topic IFRS addresses only narrowly
INTERNATIONALLY, IAS 26 (ACCOUNTING and REPORTING by RETIREMENT BENEFIT Plans) addresses a BROADLY SIMILAR topic – the FINANCIAL statements of the RETIREMENT benefit PLAN itself, RATHER than the SPONSORING employer – but IS considerably LESS prominently EMPHASISED or WIDELY applied in PRACTICE than ASBE No. 10 is WITHIN China's OWN standard-setting LANDSCAPE, GIVEN the GROWING significance of ENTERPRISE annuity SCHEMES as a SUPPLEMENTARY pension VEHICLE.
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Worked Example – Measuring Fund Financial Assets at Fair Value
Recognising investment gains directly in the fund's own results
Example: A fund's bond portfolio
An enterprise annuity fund holds a bond portfolio with a carrying amount of RMB 200,000,000. At the reporting date, the portfolio's fair value has risen to RMB 208,000,000.
The fund recognises the ASSETS at their FAIR value of RMB 208,000,000, with the RMB 8,000,000 INCREASE recognised WITHIN the fund's OWN statement of CHANGES in net ASSETS available for BENEFITS – REFLECTING the FUND'S OWN investment PERFORMANCE, ENTIRELY separate from the SPONSORING employer's own FINANCIAL statements.
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Worked Example – Contrasting the Employer's and the Fund's Own Accounting
Two separate sets of books for the same underlying arrangement
Example: An employer's contribution to its own annuity fund
A company contributes RMB 5,000,000 during the year to its own enterprise annuity fund.
The COMPANY (the EMPLOYER) simply RECOGNISES an EXPENSE of RMB 5,000,000 under ASBE No. 9, MUCH like an ORDINARY employee benefit COST. The FUND, SEPARATELY, recognises the SAME RMB 5,000,000 as a CONTRIBUTION RECEIVED WITHIN its OWN statement of CHANGES in net ASSETS, under ASBE No. 10 – TWO entirely DIFFERENT sets of ACCOUNTING for the SAME underlying CASH movement.
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Disclosure Requirements
What ASBE No. 10 requires
Net assets available for benefits, and changes therein during the periodFair value measurement basis for the fund's financial assetsContributions received and benefit payments made during the period
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Critical Judgments & Estimates
Where judgement matters most
SIGNIFICANT JUDGEMENTS
Correctly distinguishing the fund's own accounting from the sponsoring employer's accounting for the same arrangement
SIGNIFICANT ESTIMATES
Fair value of the fund's investment portfolio
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Relationship to IAS 26
Comparison – ASBE 10 vs IAS 26
FeatureASBE 10IAS 26
Subject matterReporting by the retirement benefit vehicle itselfReporting by the retirement benefit plan itself – converged in objective
Measurement of fund investmentsFair value, changes to profit or lossFair value – converged
A GENUINELY rare CASE where China has a MORE prominently applied, DEDICATED standard for a TOPIC that INTERNATIONALLY receives RELATIVELY narrow, LESS frequently applied TREATMENT under IAS 26.
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Statement Mapping
Where every enterprise annuity fund event lands (within the fund's own statements)
EventStatement(s) affectedNotes
Fair value change in fund investmentsFund's own statement of changes in net assetsNot reflected in the sponsoring employer's own financial statements
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Related Standards
Cross-reference map
StandardConnection
ASBE No. 9Employee Benefits – governs the sponsoring employer's own contribution expense, distinct from this Standard's fund-level accounting
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Quick-Reference Glossary
Enterprise annuity (企业年金)
A voluntary, supplementary occupational pension arrangement Chinese enterprises may establish in addition to the mandatory state basic pension system.
Net assets available for benefits
The fund's own measure of its total assets less liabilities, representing the pool available to meet future participant benefit payments.
Financial statement key (Chinese GAAP / ASBE terminology)
BS Balance Sheet (资产负债表)
IS Income Statement (利润表)
SCOE Statement of Changes in Owners' Equity (所有者权益变动表)
CFS Cash Flow Statement (现金流量表)
History & Development
2006-02
ASBE No. 10 Enterprise Annuity Fund issued
Operative for periods beginning on or after 1 February 2007