PracticeConsultingEmployees facing pension scheme changes caused by new accounting standard, warns actuary

Employees facing pension scheme changes caused by new accounting standard, warns actuary

One in five companies would change their pension schemes if the Accounting Standards Board's new proposals for accounting for pension costs came in, according actuarial consultant Bacon & Woodrow.

It has published the results of a survey as the consultation period for responding to the ASB’s proposals in the draft standard ‘FRED 20’ draws to a close at the end of this week.

Drawing on questionnaire responses from nearly 200 participants from across the country, Bacon & Woodrow’s survey found that

93% of respondents are concerned about the increase in volatility in the profit & loss account arising from the proposed ASB standard, while 89% are concerned about the large and fluctuating amounts which will appear in the company balance sheet.

20% of companies think that the new accounting standard is likely to cause them to make a change to their pension scheme.

14% of respondents said that the proposals would lead them to alter the pension scheme investment strategy in order to stabilise reported pension costs. 68% of companies would accept an increase in cost of 1% of pay if pension costs could be stabilised, although this drops to 42% of companies if the increase in cost was to be 3% of pay.

Raj Mody, senior consultant and actuary at Bacon & Woodrow warned: ‘It’s a worry that companies are so alarmed by the proposals that 20% of them would actually change their pension scheme because of an accounting standard. This is letting the tail wag the dog and the results suggest that the ASB needs to do more to investigate the reaction of analysts and shareholders to the new rules. This may help reassure companies before the revised standard is implemented.’

ASB pension plans will end company ‘abuses’

www.asb.org.uk

Related Articles

5 tips for SMEs to protect cash flow

Accounting Software 5 tips for SMEs to protect cash flow

2m Alia Shoaib, Reporter
Tyrie on Finance Bill 2017: ‘Making Tax Policy Better’

Consulting Tyrie on Finance Bill 2017: ‘Making Tax Policy Better’

8m Stephanie Wix, Writer
Managing partner Q&A - the year ahead: Richard Toone, CVR Global

Accounting Firms Managing partner Q&A - the year ahead: Richard Toone, CVR Global

9m Kevin Reed, Writer
Friday Afternoon Live: HMRC complaints rise; Deloitte scoops big audits; and corporate reporting woes

Audit Friday Afternoon Live: HMRC complaints rise; Deloitte scoops big audits; and corporate reporting woes

10m Kevin Reed, Writer
New head of equity capital markets for KPMG

Accounting Firms New head of equity capital markets for KPMG

10m Stephanie Wix, Writer
Deloitte 'self-imposes exile' on government contracts to defuse PM row

Accounting Firms Deloitte 'self-imposes exile' on government contracts to defuse PM row

9m Kevin Reed, Writer
Managing partner Q&A - the year ahead: Julie Adams, Menzies

Accounting Firms Managing partner Q&A - the year ahead: Julie Adams, Menzies

9m Kevin Reed, Writer
Friday Afternoon Live: Deloitte's tech thing; PAC wants HMRC 'contingencies'; and Sports Direct

Business Regulation Friday Afternoon Live: Deloitte's tech thing; PAC wants HMRC 'contingencies'; and Sports Direct

10m Kevin Reed, Writer