Myte-bee Ltd, a public limited company, is a leading support services company which focuses on the building industry. The company would like advice on how to treat certain items under IAS 19 Employee benefits. The company operates the Myte-bee Ltd Pension Plan B which commenced on 1 November 2010 and the Myte-bee Ltd Pension Plan A, which was closed to new entrants from 31 October 2010, but which was open to future service accrual for the employees already in the scheme. The assets of the schemes are held separately from those of the company in funds under the control of trustees. The following information relates to the two schemes.

Myte-bee Ltd Pension Plan A

The terms of the plan are as follows.

• Employees contribute 6% of their salaries to the plan.
• Myte-bee Ltd contributes, currently, the same amount to the plan for the benefit of the employees.
• On retirement, employees are guaranteed a pension which is based upon the number of years service with the company and their final salary.

Myte-bee Ltd Pension Plan B

Under the terms of the plan, Myte-bee Ltd does not guarantee any return on the contributions paid into the fund. The companys legal and constructive obligation is limited to the amount that is contributed to the fund.

Discusses the nature of and differences between a defined contribution plan and a defined benefit with specific reference to the companys two schemes