05 July 2002
Full implementation of financial reporting standard 17 (FRS 17), previously set for 2003, has been put back while the Accounting Standards Board, the UK industry regulator, awaits a decision from its international counterpart on the introduction of a global accounting model to govern pensions.
The International Accounting Standards Board announced last week that it was considering a fundamental change to its main pension-reporting standard – IAS 19 – as part of a package to standardise global accounting from 2005. The European Union has already stated that it will adopt IASB practices from that year.
It is believed that the IASB standard is likely to mirror FRS 17 when the UK adopts international practices.
Transparent pension accounting, however it is introduced in the UK, is likely to expose some public sector funds, most notably those within the umbrella Local Government Pension Scheme, to huge liabilities. In some cases, these are believed to outweigh assets by as much as 20%.
Public sector union Unison has called on the government to scrap the standard because it would lead to 'chaos and losses' for workers' retirement plans.
Other union chiefs believe the private sector is using FRS 17 as a convenient excuse to close expensive staff schemes.
But ASB chair Mary Keegan said there was little point in the UK introducing FRS 17 in 2003 if the reporting standard could change again in 2005.
'It will probably take some time before the IASB issues proposals, so the ASB has decided to act now,' she said.
But pension fund administrators will be required to disclose FRS 17-style details of their funds' assets and liabilities in the footnotes to their accounts from 2003.
Meanwhile, Pensions Secretary Andrew Smith, on his first visit to the Commons' dispatch box on July 3, was forced to apologise for a statistical error that could mean UK pensions contributions have been overestimated by as much as £30bn.
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