UK - NAPF CONFERENCE - The chairman of Cable and Wireless Richard Lapthorne (pictured) has attacked the FRS17 accounting standard, calling it "the final nail in the coffin for defined benefit schemes."
He told delegates at the NAPF’s investment conference that the accounting standard was a short-term measure that addressed short-term issues.
“Funding of a pension scheme is a long-term affair and we measure cash flows and liabilities over a long-term horizon. Introducing a short-term measure like FRS17 distorts the whole picture.
“The FRS17 uses the marked-to-market valuation and such a valuation does not adequately reflect the dividend valuation,” Lapthorne explained.
He said that the accounting standard was full of “too many compromises” to make it “balanceable.”
“It has become something made to adapt to all situations – something which one wouldn’t use on a day-to-day basis,” he added.
He said that with actuaries continuing to use the funding measure, FRS17 had further widened the gulf between management of accounts and statutory accounts that a company publishes.
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