IAS 19 in Slovakia: who must apply it and how the actuarial valuation works

This is an English translation of the Slovak guide IAS 19 na Slovensku. Quotations from Slovak sources are our translation; IAS 19 is quoted from its official English text.

Who prepares financial statements under IFRS

Act No. 431/2002 Coll. on Accounting (version in force from 1 June 2026; the provisions quoted below are also unchanged in the version in force from 1 January 2027) refers to IFRS as “special regulations”, that is, the international accounting standards adopted in the EU under Regulation (EC) No 1606/2002. IAS 19 is one of them.

Required: individual financial statements (§ 17a(1))

• a bank, a management company, an insurer other than a health insurer, a reinsurer, the Slovak Insurers’ Bureau, a pension fund management company, a supplementary pension company, the Stock Exchange and an accounting entity established by a special act,
• a branch of a foreign bank, a branch of a foreign management company, a branch of an insurer from another member state, a branch of a foreign insurer, a branch of a reinsurer from another member state and a branch of a foreign reinsurer.

By choice: large commercial companies (§ 17a(2))

A commercial company “may decide” to prepare its individual financial statements under IFRS if, for at least two consecutive accounting periods, it meets at least two of these conditions:

By choice: other cases (§ 17a(3))

IFRS may be chosen, for example, by an accounting entity that has issued securities admitted to trading on a regulated market of a member state, a payment institution, an electronic money institution or a securities dealer. The Act also covers successor entities, newly established subsidiaries and European companies.

An entity that starts preparing individual financial statements under IFRS continues to do so even when the conditions cease to be met (§ 17a(5)).

Consolidated financial statements (§ 22(1))

“Consolidated financial statements are prepared under the methods and principles laid down by special regulations”, that is, under IFRS. The employee benefit obligations of subsidiaries included in the consolidation are therefore measured under IAS 19 in the consolidated financial statements.

What this means in practice

Most Slovak companies prepare their individual financial statements under the Slovak accounting procedures, not under IFRS. They then make the provision for odchodné and jubilees under the accounting procedures; how to do this is explained in the guide Slovakia: severance on retirement (odchodné).

Employee benefits under IAS 19

Employee benefits are employees’ entitlements to compensation for work performed in a given period.

From an accounting point of view, they are on the one hand an expense, because the amounts of the benefits affect the company’s profit or loss. At the same time, until these entitlements are settled, they are also a liability of the employer to its employees.

Categories of employee benefits under IAS 19

• Short-term employee benefits (krátkodobé zamestnanecké požitky)
• Termination benefits (požitky vyplývajúce z ukončenia pracovného pomeru)
• Post-employment benefits (požitky po skončení zamestnania)
• Other long-term employee benefits (ostatné dlhodobé zamestnanecké požitky)

The category names follow paragraph 8 of IAS 19; the names in brackets are those of the official Slovak text.

The employer pays employee benefits on the basis of generally binding legislation and under the collective agreement. Typical examples of employee benefits for which a provision is made are:

• Financial benefit on retirement (old-age pension)
• Financial benefit on the award of a disability pension
• Financial benefit on reaching a life jubilee (milestone birthday)
• Financial benefit on a work jubilee (service anniversary)

Odchodné and jubilee bonuses: two categories, two accounting treatments

A lump sum paid on retirement, for example odchodné under § 76a of the Labour Code, is a post-employment benefit. Bonuses on life and work jubilees are other long-term employee benefits. The annex to standard PŠ 3 of the Slovak Society of Actuaries accordingly lists “lump sum payments on retirement” among post-employment benefits and “anniversary bonuses or other long-service benefits” among long-term employee benefits.

The difference lies in where remeasurements (actuarial gains and losses, for example from a change in the discount rate) are recognised:

The entitlement to jubilee bonuses, the provision for them and their accounting are explained in the guide Slovakia: jubilee bonuses.

The projected unit credit method (metóda plánovaného ročného zhodnotenia požitkov)

The employer knows in advance, usually several years ahead, the likely amount of employee benefits it will pay in the following years. Because there is a long period between making the provision and actually using it, the value of the provision, that is, the amount of employee benefits paid in the future, needs to be adjusted to its value at the time of accounting and reporting. The provision is calculated using the projected unit credit method. To apply it to the calculation of the provision, the actuarial and economic assumptions have to be defined and correctly used in the mathematical model.

IAS 19 prescribes the projected unit credit method in paragraph 67; the official Slovak translation of the standard calls it “metóda plánovaného ročného zhodnotenia požitkov”. Benefit is attributed to periods of service under the plan’s benefit formula (paragraphs 70 to 73); for statutory odchodné, which does not depend on the number of years worked, this need not mean straight-line attribution from the date of joining (explanation). Under paragraph 83, the discount rate is determined by reference to market yields on high quality corporate bonds at the end of the reporting period; where there is no deep market in such bonds, by reference to the yields on government bonds. A step-by-step procedure is in the guide Slovakia: severance on retirement (odchodné).

Actuarial assumptions used in the calculation

• Mortality rate
• Disability rate
• Employee turnover rate
• Employee data (age, sex, date of joining)

Economic assumptions used in the calculation

• Yield curve
• Inflation rate
• Salary growth rate
• Social security contribution rate

Selected official data on the yield curve, wages and inflation are on the page Aktuárske predpoklady (in Slovak).

Must an actuary do the valuation?

No. IAS 19 (paragraph 59) encourages, but does not require, an entity to involve a qualified actuary in the measurement of all material post-employment benefit obligations. The mandatory standard PŠ 3 of the Slovak Society of Actuaries (approved on 14 December 2016) puts it this way:

“IAS 19 encourages reporting entities to involve a qualified actuary in the measurement of all obligations relating to post-employment benefits, but does not impose this on them as an obligation.”

Sources

• Act No. 431/2002 Coll. on Accounting, § 17a and § 22 (Slov-Lex, in Slovak, version in force from 1 June 2026; the version from 1 January 2027 does not change these provisions)
• Regulation (EC) No 1606/2002 on the application of international accounting standards
• Commission Regulation (EU) 2023/1803 adopting certain international accounting standards (including IAS 19)
• Slovak Society of Actuaries, mandatory standard PŠ 3 (in Slovak)
• Slovakia: severance on retirement (odchodné): when to make the provision, how to calculate it and how to account for it