Pensions group rejects future liability proposals
Members unanimous in their preference to continue with the current approach, rejecting plans for change included in January's discussion paper
Pension scheme accounts should not be required to recognise the actuarial
liability to pay pensions in the future, according to the Pensions Research
Accountants Group (PRAG).
Members of the independent research group held a debate on the Financial
Reporting of Pensions, the discussion paper issued by the Accounting Standards
Board (ASB) in January, at its summer meeting on 25 June.
PRAG president Mike advocated a ‘back to basics’ approach, and questioned
whether it was appropriate for accountants to ‘interfere in economic modelling’.
Executive committee member Zahir Fazal said that the proposals, if
implemented, would cause confusion as the valuation of the actuarial liability
would be different for employer financial reporting, pension scheme financial
reporting and for the purposes of funding the scheme. Fazal said he was in
favour of continuing the current principle of stewardship, a view supported by
other members.
Following discussions, members of PRAG voted unanimously against the ASB
proposals in relation to including actuarial liability.