Valuation of employee benefit provisions

For the valuation of employee benefit provisions under the UGB, we publish our interest rate recommendations in accordance with AFRAC Opinion 27 (Provisions for pensions, severance payments, jubilee bonuses, and similar long-term obligations under the provisions of the Austrian Commercial Code).

The recommended average interest rates were prepared based on our reporting date interest rate recommendations (see the chapter "Interest rate recommendations for employee benefit provisions under IFRS (IAS 19)").

According to AFRAC Opinion 27, the average interest rate is the average of the current interest rate (the rate at which a company with a high credit rating can obtain debt capital with a term essentially corresponding to the average residual term of the obligations at the balance sheet date) and the rates from the preceding four to nine balance sheet dates.

In its opinion on "Provisions for pensions, severance payments, jubilee bonuses, and similar long-term obligations under the provisions of the Austrian Commercial Code (UGB)," the Austrian Financial Reporting and Auditing Committee (AFRAC) has permitted the simplifying assumption of a 15-year residual term for determining the discount rate, provided there are no significant objections in individual cases.

Below, you will find the average interest rates under the UGB, as calculated by us, in the download section.

Interest rate forecasts can be provided upon request. This service is free of charge for our clients.

Furthermore, we would like to inform you of the option to use the average interest rate based on the German legal ordinances pursuant to Section 253 (2) sentence 4 of the German Commercial Code (HGB) (BilMoG interest rate), in accordance with the explanatory notes on the revision of Section 211 (2) of the Austrian Commercial Code (UGB) introduced by the 2014 Accounting Amendment Act (RÄG 2014).

The selected interest rate and the method used to determine it must be applied consistently.

An article we prepared on selecting the interest rate in accordance with the AFRAC opinion can be found here.

You can find the revised AFRAC opinion from June 2022 here.

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