Please use this identifier to cite or link to this item: https://www.um.edu.mt/library/oar/handle/123456789/30513
Title: The effect of second pillar pensions on a Maltese listed company
Authors: Bezzina, Daniel
Keywords: Pensions -- Malta
Employee fringe benefits -- Malta
Issue Date: 2017
Abstract: Purpose: Pensionable income has become a great concern. Therefore, the objectives of this study are to describe second pillar pensions in Malta, evaluate accounting treatment and disclosures as required by IAS 19, Employee Benefits, and assess the effect of a second pillar pension scheme on a Maltese listed company. A walkthrough along the years presents the amendments that occurred under IAS 19, with special attention to recent amendments, followed by the financial implications of the introduction of a Defined Benefit or Defined Contribution scheme on a Maltese listed entity. Design: This study looks into additional costs that a company would sustain by the introduction of a Defined Benefit or Defined Contribution scheme. A base case scenario is presented for each scheme, followed by a sensitivity analysis. A qualitative case study approach was deemed the most appropriate methodology for this dissertation. Furthermore, the necessary data was provided by the listed company, and was used to compute the necessary computations as required by IAS 19. Findings: Findings demonstrate that under a Defined Benefit scheme, additional pension obligations to be paid upon employees‟ retirement are material, and profits decreased by €0.77m to €4.96m. Conversely, under a Defined Contribution scheme, increase in liabilities was much lower due to a lower percentage being paid into the fund, and the decrease in profits ranged from €0.29m to €0.9m. Conclusion: This study concludes that Defined Benefit schemes are more costly when compared to Defined Contribution schemes since they use actuarial assumptions, including Present Values, to determine the company‟s liabilities, as well as Fair Value accounting for its assets, leading to greater volatility in the accounts. Implications: If a rigorous legal framework is established together with the necessary support and guidance, second pillar pensions might be the next step forward to combat the pension crisis.
Description: M.ACCTY.
URI: https://www.um.edu.mt/library/oar//handle/123456789/30513
Appears in Collections:Dissertations - FacEma - 2017
Dissertations - FacEMAAcc - 2017

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