GLOBAL - An overwhelming majority (71%) of the Global Pensions 100 Panel believes pension fund finance should be viewed from a risk management perspective.
The survey results came in the wake of a consultation paper released by the Accounting Standards Board (ASB) last month entitled The Financial Reporting of Pensions.
One panel member commented: "I believe there is some merit in the twin track approach of funding and accounting, which helps to give trustees some advance warning of potential employer issues."
Paul Klumpes, professor of accounting at the Tanaka Business School, Imperial College London, said the results suggested most pension fund managers employed a risk management approach to evaluate the economic impact on firms' reported pension exposure.
"This implies the ASB should reconsider the trade-off between emphasising the reliability of the firm's reported obligation and placing greater relevance on the potentially important (currently undisclosed) contingent claims embedded in pension fund balance sheets, and the corresponding corporate guarantees of those benefits," he said.
Concerns over how accounting standards could impact on regulation were voiced by Con Keating, analyst at Brighton Rock. He commented: "What worries me is less the accounting standards, [and more] their interaction with regulation. Any analyst who disagrees with the standard can work out their own world view, but the real problems start when you have biased standards, which are then cemented in regulation and go on to cause material cost."
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