Standards - BT blasted for flouting account rules
BT has been accused of breaking disclosure rules over management of its £20bn pension fund by a firm of actuaries which has also blasted other FTSE 100 for ‘massaging’ pension fund figures in their annual accounts.
BT has been singled out in Lane Clark & Peacock’s sixth annual survey of pensions accounting for breaking pensions accounting standard SSAP24 – a charge which BT vigorously denies.
Lane Clark & Peacock said BT had not accounted for £224m in costs of extra pensions on redundancy.
It slammed BT’s justification of having a surplus as it only amounted to £60m. The report said: ‘We do not believe the accounting treatment is in accordance with SSAP24.’
BT retorted that it had complied with the standard. The Financial Reporting Review Panel, responsible for enforcing accounting standards, declined to comment. Other companies shamed included BAT, BOC, Carlton, Glaxo, Siebe and United News & Media.
Concerns were also voiced that top companies were changing actuarial assumptions to disguise the effect of the abolition of advance corporation tax credits in 1997, a move which cost UK pension schemes £3bn a year.
Lane Clark & Peacock also expressed fears that an expected replacement for SSAP24 with greater emphasis on market values could persuade finance directors to abandon final-salary schemes in favour of alternatives less beneficial to employees.
Bob Scott, a partner with the firm, said it was ‘a sad reflection that a humble accounting standard could cause us to throw away a pension scheme that has served us so well.’