BusinessCompany NewsPensions group call for relaxation of FRS 17

Pensions group call for relaxation of FRS 17

The group representing Britain's £700bn pension fund industry has stoked the row over the controversial FRS 17 accounting regulation by calling for the accounting standard to be relaxed.

Peter Thompson, chairman of the National Association of Pension Funds, said he had written to the Financial Reporting Council with concerns over FRS 17, which forces companies to account for pension schemes as liabilities by 2003.

The new rule has already exposed large deficits at companies including HSBC(£837m), BAE Systems (£650m) and AstraZeneca (£407m).

Thompson said his letter to Sir Bryan Nicholson, chairman of the FRC, which developed FRS 17, expressed his continuing concern over certain aspects of the complicated rule and the likelihood that it would be superseded by a new international standard in just a few years time.

Speaking at the NAPF annual conference in Brighton, Thompson said it was ‘overwhelmingly clear’ that the users of company accounts did not understand what impact FRS17 would have.

He said: ‘For example, a deficit of £200m under FRS 17 does not mean that the company is necessarily liable for £200m, either in a lump sum (because any shortfall can be made good over a period of years) or at all (because over the overstatement of liability).’

But the Accounting Standards Board has refused to back down despite a potential clash between FRS 17 and international accounting standards, which all EU companies must adopt by 2005.

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