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13 Nov 2008
David Norgrove, chairman of the pension regulator, has described as 'bizarre' accounting rules which have unintentionally linked discount rates for calculating liabilities to the fortunes of the distressed financial sector.
His remarks coincide with a study showing pension liabilities of the UK’s 350 biggest companies are understated by about £160bn because of the rules, the Financial Times reports.
During the financial crisis, pension schemes have been using the higher interest rates on corporate bonds as their discount rates, which is having the misleading positive effect of pushing down liabilities.
'It seems perverse that deficits measured in accounting terms seem to have gone down because their liabilities have gone down,' Norgrove said. 'We have got a bizarre situation. We don’t have a good handle on pension deficits.'
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Briefings
By looking at the reasons supplier statements became unfashionable, and the reasons why it is different today, this paper delves into the many benefits that can be obtained by automating the process.
Having a real and true view of your organisation’s current financial position, and having the right systems and processes in place, will ensure that you can make strong choices and are ready to capitalise on opportunities
AccountancyAgeInsight is a frequently updated resource centre for finance professionals, offering a free and easy-to-use digital library of briefings, white papers and other information resources. 
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