GLOBAL - Exclusive research carried out by Global Pensions has revealed a significant split in how pension funds across the globe view current accounting standards.
Some 48% of the Global Pensions 100 Panel were happy with the current system, where assets are marked to market and liabilities are a (bond discounted) present value.
However, a significant 41%, said current methods were flawed, while 11% were undecided.
The results were seen as progress by campaigners against the current standards who believe the long term nature of pension fund liabilities require a different valuation method.
Guy Fraser-Sampson, author of Multi Asset Class Investment Strategy and a vocal opponent of the current standards, said the results showed an increased awareness of accounting standards among pension funds.
“When I started researching my book three years ago I found that most pension funds were unaware as to how accounting standards were impacting on them. However the fact that around 41% now see them as inappropriate show progress has been made. Presumably the 11% who answered that they did not know, have yet to make up their minds.”
Con Keating, principal of The Finance Development Centre, echoed Fraser-Sampson’s view: “This is quite a conservative industry and it takes a lot of courage for people to stand up and say that something they have been doing for years may be wrong. The fact only 41% saw the need for change is certainly not disappointing.”
Alan Cook, International Financial Reporting Interpretations Committee (IFRIC) co-ordinator and IASB member said: “We do not wish to comment on the results of the survey but are glad that Global Pensions is encouraging people to think about this issue at a time when IASB has decided
to undertake a project to review its own standard on the subject.”
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