DWP concerned over pensions accounting

DWP to step in over City oncerns over lowered pension values

Written by Kevin Reed

Accountancy Age, 07 Jul 2008

The Department for Work and Pensions could step in to urge the Accounting Standards Board to look again at potential changes in the way companies account for their pension schemes.

Pensions minister Mike O'Brien told the Daily Telegraph that he would make representations to the ASB over potential changes to the way pensions are accounted for, due to concerns from the City that pension values could be lowered under the new plans.

'The level of concern about these changes is quite serious,' said O'Brien.

The ASB launched a consultation paper in January that has been interpreted by industry as estimating pension assets based on government bonds, which would lower their value.

'The ASB's proposals are likely to further weaken defined benefit provision in the UK, increasing scheme liabilities and undermining scheme sponsors' willingness to provide these types of pensions,' said NAPF chief executive Joanne Segars.

Comments on the ASB's discussion paper are requested by 14 July 2008.