David Willetts, shadow secretary of state for work and pensions, wrote in today’s FT: ‘I recognise that FRS 17 is the messenger and not the message.
‘The international accounting standard, IAS 19, is bound to change between now and 2005, when we are due to adopt it. There is a danger that we are going to suffer a double-dose of pain – now, as we adopt FRS 17, and then again in 2005.’
Accounting Standards Board chairwoman Mary Keegan is due to meet with Sir David Tweedie, chairman of the International Accounting Standards Board this Thursday to discuss the two pensions standards.
Experts predict that updates to IAS 19 will bring it into line with the UK’s FRS 17 rule. Sir David was ASB chairman when FRS 17 was developed. It came into force however as Keegan took up the ASB mantel.
Keegan has so far resisted all calls to change the standard.
Willett added: ‘Sadly, so many of our leading companies have now closed their pensions schemes to 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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