G-Sec Interest Rates Yield Chart (India) Actuarial Valuations: Defined Benefit Obligations 31st March 2024

Discount Rate for Actuarial Valuation of Employee Benefit

As per Para 83 of IND AS 19/IAS 19 (Revised) & Para 78 of AS 15 (Revised), the rate used to discount post-employment benefit obligations (both funded and unfunded) should be determined by reference to market yields at the balance sheet date on government bonds

Key Observations:

On a Yearly basis, the bond Yields as at Mar 2024 are reduced in comparison to the yield as at March 2023. The Yields are reduced by 30 basis points for higher term maturities and 5 to 25 basis points for shorter term maturities in Comparisons to Yields as at March 2023.

Entities could expect liabilities to increase by 2.5% because of of reduction in interest rate (assuming a 10-year term of obligation and a 25-basis points reduction in interest rates in Comparison to Mar 23.)

About Discount Rate & Use in Actuarial Valuations

The discount rate is a key assumption used in the Actuarial valuation of employee benefit liabilities. Actuarial valuation primarily finds the Present value of the liabilities (or benefits), that are expected to be paid in the future. For this purpose, it is vital to use the appropriate discount rate. The various accounting standards have prescribed, for the purpose of Employee Benefit valuations, the basis for choosing the discount rate. It states that an entity should use the government bond yields (or corporate bond yields, where applicable) for a term that is equivalent to the maturity term of the liabilities. Because of the aforesaid Guidance, the year-on-year movement in the discount rate is reflected in the year-on-year fluctuations in the Company’s Profit and Loss and Balance sheet

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G-Sec Interest Rates Yield Chart (India) Actuarial Valuations: Defined Benefit Obligations 31st March 2024

Discount Rate for Actuarial Valuation of Employee Benefit

As per Para 83 of IND AS 19/IAS 19 (Revised) & Para 78 of AS 15 (Revised), the rate used to discount post-employment benefit obligations (both funded and unfunded) should be determined by reference to market yields at the balance sheet date on government bonds

Key Observations:

On a Yearly basis, the bond Yields as at Mar 2024 are reduced in comparison to the yield as at March 2023. The Yields are reduced by 30 basis points for higher term maturities and 5 to 25 basis points for shorter term maturities in Comparisons to Yields as at March 2023.

Entities could expect liabilities to increase by 2.5% because of of reduction in interest rate (assuming a 10-year term of obligation and a 25-basis points reduction in interest rates in Comparison to Mar 23.)

About Discount Rate & Use in Actuarial Valuations

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G-Sec Interest Rates Yield Chart (India) Actuarial Valuations: Defined Benefit Obligations 30th June 2024