UK - The Confederation of British Industry (CBI) has slammed proposals from the Accounting Standards Board (ASB) to change the way liabilities are calculated and reported, describing them as a "kick in the teeth" for firms committed to defined pension schemes.
The ASB suggests firms use a risk-free rate rather than the current high-quality corporate bond rate required by current accounting standards, and have financial statements reflect actual return on assets, rather than expected returns.
Neil Carberry, head of pensions and employment at the CBI, told Global Pensions it was very concerned by the proposals put forward by ASB, which would be used to influence the International Accounting Standards Board.
Carberry said: "What we have seen in the UK over the past few years is a generally escalating burden of running DB schemes, and this is just another example of that.
"This has led to a position where firms have decided to keep to their DB promises for existing staff, but stopped offering those benefits for new staff. What we have to guard against is a situation where the price becomes so high that this trend is reawakened.
"There is a core of firms who are very committed to DB, and this is would just be a kick in the teeth to their ongoing commitment."
Carberry's comments echoed those of a number of industry bodies and pension professionals.
National Association of Pension Funds chief executive Joanne Segars, said, while the ASB paper provided a good analysis of the issues related to the accounting of pensions, some of the suggestions could undermine employers' willingness to continue to sponsor defined benefit schemes.
She said: "DB schemes are entering a new period of stability. While pension schemes must be transparent, nothing must be done to undermine this stability and employers' commitment to pensions."
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