Defined benefit or not?

Question

As a practice our company pay a lump-sum payment ($10000) for non-executive staff when they retire after at least 10 years of service. However there is no legal requirement for such a payment. Shall we consider this a defined benefit plan under IAS 19 and account for accordingly?

Answer 1

If your company does it as a practice for long time then it would make a constructive obligation towards the employees and it should be taken as a defined benefit plan and accounted accordingly as per IAS 19.