Adopt FRS 17 on pensions now, says CIPFA

1 Aug 02
Local authorities should push ahead with rapid adoption of the controversial accounting rule FRS17 or face a separate standard that could unveil £2bn of pension fund liabilities across the UK, CIPFA has warned.

02 August 2002

In a letter sent to all UK authorities on August 1, the institute asked chief finance officers to choose one of three options to account for the £2bn of liabilities accrued through councils' obligations, such as early retirement payments and spouse pensions.

Such payments often do not appear on pension fund balance sheets. Privately, CIPFA experts say they would prefer authorities to opt for early adoption of FRS 17 to solve the problem, because it is likely to be similar to the international pension accounting standard that is due to come into force in 2005.

FRS 17 will force UK organisations to reveal all pension fund assets and liabilities on their balance sheets. Its implementation was scheduled for 2003 but was delayed until 2005 by the Accounting Standards Board, the industry regulator, while its international counterpart produced the global standard.

Initially, CIPFA welcomed the delay, but it has come under increasing pressure from public sector auditors to implement a standard that would accurately account for the £2bn 'discretionary benefits' black hole.

The £2bn could be accounted for by using other reporting methods. But John Stanford, CIPFA's policy and technical assistant director, said: 'We think that the approach we are proposing is in the best interests of local authorities and users of accounts.'

A spokesman for the National Association of Pension Funds said councils were more likely to be 'amenable' towards FRS 17 than the private sector because they do not have share prices that could be adversely affected.

PFaug2002

Did you enjoy this article?

AddToAny

Top