Ernst & Young recently closed its final salary scheme to existing members, while Whitbread, ICI, Lloyds TSB, Sainsbury’s and BT have all axed their schemes in favour of less costly options due to a volatile stock market, earlier retirement and longevity.
Writing in the Financial Times, shadow work and pensions secretary David Willetts said he recognised ‘FRS 17 is the messenger and not the message’.
But he added: ‘The international accounting standard IAS 19 will change between now and 2005, when we are due to adopt it. There is a danger we will suffer a double-dose of pain – now, and again in 2005.’
Accounting Standards Board chair Mary Keegan is due to meet with Sir David Tweedie, chairman of the International Accounting Standards Board to discuss the two standards.
Experts predict updates to IAS 19 will bring it into line with FRS 17.
Sir David was ASB chairman when FRS 17 was developed. But it came into force as Keegan took up the post. She has so far resisted calls to change the standard.
Willetts added: ‘Sadly, many of our leading companies have closed their pensions schemes for future entrants that it may be too late to reverse the trend.’ He concluded: ‘With some flexibility on FRS 17 and a radical rethink from government, it may not be too late to avoid a catastrophic reduction in pensions saving and a growing dependency on the welfare state.’
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