UK - New international accounting rules will be fundamentally the same as FRS17, delegates at the recent NAPF autumn conference were warned.
International Accounting Standards Board member Geoffrey Whittington said the new rules – which will be available for early adoption in 2005 and compulsory from 2006 – will remove the “smoothing” element of the current IAS19.
Whittington said FRS17 critics needed to face the “bold fact” that the standard provided a better representation of the true state of a scheme and that it would be “flatly wrong” to include any smoothing mechanism.
He added that the IASB was currently looking at asset ceilings which would limit how much of an asset could be accounted for in a defined benefit scheme’s surplus.
Whittington’s remarks echo earlier industry warnings on the inevitability of FRS17 made by Hewitt Bacon & Woodrow principal Martin Lowes.
He said that there was “absolutely no chance” of IAS19 looking like anything other than FRS17.
But in response to Whittington’s comments, Lowes commented: “It’s the right standard, but at the wrong time.
“It’s wrong to have immediate recognition of pension gains and losses when you have not got immediate recognition of other financial instruments, which we have not yet.
“They should have it for everything, not just pensions. If pensions had gone at the same time as the other areas, companies would have seen the risks associated with pensions in the context of the financial risks they are running across the company as a whole, and pensions would not have seen so scary.”
Enhanced powers for The Pensions Regulator (TPR) to prosecute and fine company directors who "wilfully or recklessly" put their defined benefit (DB) pension scheme at risk will be hard to enforce, commentators say.
Melrose has pledged to contribute up to £1bn to GKN's pension schemes as part of a final offer to acquire the engineering business.
Existing master trusts will be forced to pay £41,000 when applying for authorisation under the upcoming regime, the government has confirmed.
UPDATE 2 - DWP publishes DB white paper: Stronger powers for TPR, DB chair statements to be introduced
The Pensions Regulator (TPR) will be given the power to fine company bosses who deliberately puts their defined benefit (DB) schemes at risk, the government has confirmed.