UK - New accounting rules to stop firms inflating profits by using unrealistically high pension return assumptions could make matters worse, a leading actuary claims.
International Accounting Standards Board proposals would stop companies using inflated assumptions to boost profits artificially.
The change is proposed as part of a reformed International Accounting Standard on pensions and is due to come into force in 2005.
But actuaries say the amendment is only one of three components used by the IASB for current calculations of pension expense.
Faculty and Institute of Actuaries Pensions Board deputy chairman Wendy Beaver said: “Just to focus on one of the components is a potential flaw.
“We want an approach that won’t mislead and we are worried that the proposal could be misleading.”
However, the NAPF says FRS17 itself has flaws and that any small amendments to it in a revised version of IAS19 will not make much difference.
An NAPF spokeswoman said: “We like to see transparency in accounts but we don’t necessarily think that this snapshot approach to pensions accounting really does increase transparency that much.”
In November, the Accounting Standards Board formally moved to defer the mandatory requirement for full adoption of the standard until January 1, 2005.
The extension to the transitional arrangements of FRS17 will allow the ASB to move in line with any international standard without having to change rules twice.
The ASB said it continued to encourage early adoption of all the requirements of the UK standard on a voluntary basis.
FRS17 information must still be disclosed in the notes to accounts in companies where the full standard is not adopted early.
The Centre for Social Justice is calling for the state pension age to be raised to 70 by 2028 and to 75 by 2035, a much faster rise than currently planned.
The High Court has blocked the £12bn transfer of Prudential's annuity book to Rothesay Life, citing the insurer's lack of "established reputation" and differing "capital management policies".
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