UK - The Accounting Standards Board has rejected a bid by the Society of Pension Consultants to change the way death benefits are calculated under FRS17.
The SPC wanted the liabilities of pension funds whose benefits were “self-insured” to be calculated in the same way as pension funds whose liabilities were insured by a life company.
It argued that the intention of FRS17 itself is that accounting for accrued liabilities should not depend on whether or how benefits are insured.
It pointed out too that under the present ASB stipulation, companies’ balance sheet figures could fluctuate simply by the trustees altering their insurance arrangements.
The ASB though has turned down the SPC’s request, a move that will mean that schemes whose benefits are “self-insured” will now have to maintain a reserve of around 5% of their value to insure benefits.
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