Pension scheme accounting disclosures
We are now in an era where there are very few private sector defined benefit (DB) schemes still open to new members – or even future accrual. Most employers cite the rising cost of pension provision and the volatility of liabilities on the balance sheet as the reason for closure. But do the pension disclosures shown in the accounts fully reflect the circumstances of the scheme?
Apart from where dictated by the relevant accounting standard (such as FRS102 or IAS19), company directors have considerable control over the assumptions to be adopted in the calculations. Often, these assumptions reflect those that have been used for the latest statutory funding valuation. However, it is a legislative requirement that assumptions for statutory funding purposes must be prudent. Assumptions to be used for accounting purposes, on the other hand, should be more of a 'best estimate'; taking into account the scheme's specific circumstances. The result can be overstated liabilities and pension costs in the employer's accounts.
BBS has considerable experience and expertise in advising companies on their pension accounting disclosures and undertaking the necessary calculations. We provide this service to both organisations where we are also appointed as Scheme Actuary to their scheme, and those where we are not. In addition, we regularly provide our clients with updates on any changes to FRS17 and/or IAS19, so you have plenty of time to review the likely impact of the changes.
For more information on how BBS can help you ensure your pension scheme accounting disclosures are right for your business, please click here to make an enquiry.