Pension accounting row heats up
The National Association of Pension Funds has stepped up its criticism of new accounting rules on pensions as more companies cut final salary schemes.
The NAPF said this week more than three-quarters of companies are unlikely to offer final salary pensions schemes because of the new accounting rules.
Peter Thompson, chairman of the NAPF, said: ‘We have been warning for some time that FRS 17 would drive employees from providing defined benefit pensions, and that is precisely what is now happening.’
Increased warnings follow after Accountancy Age revealed in January that Ernst & Young will in March axe its final salary scheme, not only for new entrants, but for the 2,000 existing scheme members.
The Accounting Standards Board, which issued the new rules, has always maintained that if the new rules provide more transparency that can only be a good thing for investors, analysts and users of accounts.
Mary Keegan, chairman of the ASB, said companies based pension decisions on ‘economic’ grounds, ‘not accounting’.