Experts warn that FRS17 is not strict enough

Experts warn that FRS17 is not strict enough

Pensions Board says pension deficit costs well in excess of current estimates under FRS17

The Pensions Board has warned that employers will have to pay billions more
than is currently forecast in order to pay off their pension costs.

The Board argued in a research paper that the method used to calculate
buy-out costs underestimates the actual costs required to pay deficits in full.

The implication of this is that the actual cost of paying off deficits will
exceed the amount calculated under the FRS17 accounting standard, which puts the
estimated FTSE100 pension costs at £50bn.

According to the Financial Times, estimates used by pension
actuaries are not conservative enough when it comes to estimating the longevity
of scheme members and a pension scheme’s solvency.

James Fraser, the head of the LEK Consulting’s financial services practice,
told the FT that the deficit of the FTSE100 could be as high as £150bn,
approximately triple the shortfall calculated using FRS17.

He said: ‘Many pension funds still do not take full account of potential
future improvements of longevity in their valuation, in spite of the fact that
life expectancy has been improving since the Middle Ages.’

Share

Subscribe to get your daily business insights

Resources & Whitepapers

Why Professional Services Firms Should Ditch Folders and Embrace Metadata
Professional Services

Why Professional Services Firms Should Ditch Folders and Embrace Metadata

3y

Why Professional Services Firms Should Ditch Folde...

In the past decade, the professional services industry has transformed significantly. Digital disruptions, increased competition, and changing market ...

View resource
2 Vital keys to Remaining Competitive for Professional Services Firms

2 Vital keys to Remaining Competitive for Professional Services Firms

3y

2 Vital keys to Remaining Competitive for Professi...

In recent months, professional services firms are facing more pressure than ever to deliver value to clients. Often, clients look at the firms own inf...

View resource
Turn Accounts Payable into a value-engine
Accounting Firms

Turn Accounts Payable into a value-engine

3y

Turn Accounts Payable into a value-engine

In a world of instant results and automated workloads, the potential for AP to drive insights and transform results is enormous. But, if you’re still ...

View resource
Digital Links: A guide to MTD in 2021
Making Tax Digital

Digital Links: A guide to MTD in 2021

3y

Digital Links: A guide to MTD in 2021

The first phase of Making Tax Digital (MTD) saw the requirement for the digital submission of the VAT Return using compliant software. That’s now behi...

View resource