G-Sec Interest Rates Yield Chart (India) Actuarial Valuations: Defined Benefit Obligations 31st December 2023

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

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Key Observations: 

  • On a 9 Monthly basis, the bond Yields as at December 2023 are stable and in line with yields as at March 2023 for higher term maturities and reduced in the range of 5 basis points to 15 basis point for shorter term maturities in Comparisons to Yields as at March 2023.

  • On 3 Monthly basis, the bond yields have shown reduction for short term maturities and are stable for long term maturities.

Entities could expect liabilities to increase by 1.5% because of interest rate increase (assuming a 10-year term of obligation and a 15-basis points reduction in interest rates in Comparison to Mar 23.)

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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.

For any query, observation, or more information please reach us personally at

jenil shah - partner actuary - kapadia global Actuaries
Mr. Jenil Shah,
Consulting Actuary
jenil@kapadiaglobal.com
+91-9867075522
Anil Sevak -director-kapadia global Actuaries
Mr. Anil Sevak,
Head: Employee Benefits
anil@kapadiaglobal.com
+91-8454066628