The Financial Reporting Council has today moved to clarify issues relating to accounting for defined benefit pension plans in advance of a new UK and Irish GAAP becoming mandatory from 1 January 2015.

In an exposure draft FRED 55 Draft Amendments to FRS 102 – Pension obligations, the FRC said its proposed amendments would clarify that UK and Irish GAAP does not include the complexities of IFRS.

“No additional liabilities need to be recognised in respect of a schedule of contributions that has been agreed in order to address a deficit in the plan,” the FRC said.

Further, amendments would clarify that “consistent with current practice, the effect of restricting the recognition of a surplus in a defined benefit plan, where the surplus is not recoverable is recognised in other comprehensive income, rather than profit or loss.”

FRC board member Roger Marshall said “proposed amendments are intended to resolve uncertainty over the application of FRS 102 in a proportionate and practical manner before FRS 102 becomes mandatory”.

The FRC expects to issue the final amendments to FRS 102 early in 2015. They will apply to accounting period beginning on or after 1 January 2015.

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