KPMG has published a guide for pension scheme accountants following the revisions made to the financial reporting guidelines, the first major changes in 30 years.

The guidelines, otherwise known as the Statement of Recommended Practice (SORP) by the Pensions Research Accountants Group (PRAG) also include updates for changes in industry practices, legislation and regulation.

KPMG state that early planning is necessary to deal with the new rules, which present major challenges to pension schemes. Failure to do so could result in an unnecessary cost and administrative burden, it warned.

All UK private sector pension schemes will be affected by the changes, which apply to accounting periods commencing on or after the 1 January 2015. The changes are being driven by changes in a new accounting standard, known as FRS 102, which sets out pension scheme financial reporting in a primary accounting standard, for the first time in the UK.

KPMG head of pensions assurance services Kevin Clark said financial reporting rules for pension schemes have remained unchanged since 1986.

“PRAG’s publication of the latest SORP brings pension scheme accounting up-to-date and increases transparency in the key areas of investment valuation and risk management,” he said.

However, he stated trustees may face a number of challenges as the changes are significant and are the first major revision for decades.

“Trustees need to make an early assessment of how the changes will impact them and put plans in place on how to implement the revisions. Failure to do so will result in additional burden not only in terms of time and cost, but possibly also in terms of greater scrutiny from regulators if completion of statutory financial statements are delayed beyond regulatory deadlines,” he said.

While KPMG believes that changes made overall are positive, it does believe there will be some challenges for trustees. These include changes to annuity valuation, investment valuation disclosures, risk disclosures and how they report on actuarial liabilities.

Clark added that pension legislation, which needs to change to come in line with the new accounting rules, could complicate things further.

“Failure to do this will lead to a double whammy of compliance with outdated legislative disclosures and the new requirements,” he said.

He said DWP are sympathetic to the need for change here, but are “swamped” with the current changes taking place in the pension arena.

“Current views are that legislative change for pension accounting will not happen until after this year’s general election. In the meantime we would encourage any schemes thinking of adopting the new requirements early to consider the impact of this double whammy,” he concluded.

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