FRS17 still causing pension headaches
Controversial UK pensions standard FRS17 is still causing black holes in company pension funds, despite an increase in the stock market last year.
Analysis by consultant Lane Clark & Peacock, found that a jump in pension fund liabilities, due to falling bond yields, largely offset any gains from stock market rises.
Some companies could have seen their pension black holes rise by over 10% last year and the FTSE100 deficit of £55bn was unlikely to have fallen despite returns on shares of about 20% last year.
The firm said FRS17, which offers a snapshot of a company’s pension fund, depends heavily on inflation and corporate bond yields. Both of these indicators did not do as well as hoped last year.