UK - Pension fund deficits could seriously affect the stock values of many listed UK companies due to the conversion to FRS 17 rules, according to a pension consultant.
FRS 17 sets standards for how companies measure and disclose defined benefit pensions on the balance sheets.
“The old, hopelessly vague, SSAP24 has been replaced by a very prescriptive FRS 17,” notes Ian Sykes, a director in KPMG’s pension practice. “Pension deficits will now have to be assessed objectively and put onto the employer’s balance sheet - where they should have been all along.”
Companies should also take note of the differences between FRS 17 and the upcoming IAS 19, an international pension reporting standard that is similar to FRS 17. The International Accounting Standards Board late last year amended IAS 19 to allow the option of recognising actuarial gains and losses in full in the period in which they occur, in a separate statement, outside the profit and loss account. This option is similar to requirements in FRS 17.
“Many companies advisers think that FRS 17 and IAS 19 are identical, but there are significant differences which need to be highlighted,” said Sykes. “The international pension standard IAS 19 is ‘unfinished business’. It has a number of options and grey areas in it that people need to understand. We’re already seeing signs of some confusion as we work on the latest round of this year’s accounts.”
Life expectancy in the UK saw no improvement between 2015 and 2017 as the number of people aged over 90 hit a record high, latest Office for National Statistics (ONS) data reveals.
Self-administered pension funds spent £14bn on payments to pensioners in Q2 2018, but only received £11.4bn of contributions (net of refunds), latest Office for National Statistics (ONS) data reveals.
The Pensions and Lifetime Savings Association (PLSA) has named the 17 members of its inaugural policy board after a competitive application process with 60 candidates.