Delay over accounting standard for pensions

first_imgEmployers in the UK have been given longer to comply with a controversialaccounting standard for pensions, which has been blamed by some firms for theclosure of final salary pension schemes. The FRS 17 standard, which will mean that businesses will have to reportannual changes in the value of their pension funds in their main financialstatements, was due to have been adopted by firms with accounting periodsending in June this year. But the Accounting Standards Board (ASB) has extended the deadline for thenew system until 2005 following an announcement that the InternationalAccounting Standards Board is to introduce a similar international accountingstandard. ASB chairman Mary Keegan said the decision to defer the implementation ofFRS 17 was taken to prevent employers having to change their pension accountingtwice when the international standard is introduced. Businesses do not like the FRS rule because it forces them to report annualchanges in the value of their pension schemes. Companies including British Airways and BT have partly blamed the FRS 17 accountingrule for the closure of their final salary pension schemes. The CIPD’s assistant director general, Duncan Brown, welcomed the decisionto defer the introduction of FRS 17 but said it would not take the pressure offfinal salary pension (defined benefit) schemes in the long run. He said: “The fundamental dynamics causing problems for defined benefitschemes are not going to go away. “The cost of schemes, which are heavily focused on the stock market,are going up, funds are low, we are retiring earlier and people are livinglonger.” Susan Anderson, CBI director of HR policy, welcomed the decision to delaythe implementation of FRS 17 but also called for changes to be made to thestandard. By Ben Willmott Schemes are showing deficitA survey of 146 of the UK’s topcompanies reveals that more than 60 per cent have pension schemes which showdeficit under FRS 17.The study by Mercer Human Resource Consulting reveals that ofthese, the deficit exceeds 10 per cent of scheme liabilities in 38 per cent ofcases. Nearly 40 per cent of firms have pension funds of a size exceeding 50per cent of company net assets.The report states: “Managing pension liabilities for manycompanies has become critical because of their size relative to the overallbusiness and this is driving changes to benefit provision and investmentstrategy.” Delay over accounting standard for pensionsOn 9 Jul 2002 in Personnel Today Previous Article Next Article Comments are closed. Related posts:No related photos.last_img read more