11/3/2010
By Ellie Bennett
The National Association of Pension Funds (NAPF) has announced that it will lead a major review of pension accounting standards, beginning with a summit on the subject that will take place in the coming months.
Lindsay Tomlinson, chairman of the NAPF, revealed the organisation's plans at the NAPF's investment conference currently underway in Edinburgh. Tomlinson told delegates that the pensions industry needs to move forward from the "currently unsatisfactory" standard, set down by the Accounting Standards Board (ASB), FRS17, which requires firms to value the assets and liabilities of their pension funds in a method that results in significant balance sheet volatility and means that the likely long-term cost of funding pensions is overstated.
The Summit will look at finding a better way to value pensions on balance sheets and ensuring the survival of defined benefit (DB) pensions.
Tomlinson explained that the current accounting standards have damaged DB provision in the UK. "The NAPF want to find a better approach to pensions accounting that balances transparency with a less volatile assessment of assets against long-term liabilities."
He added: "Pension accounting matters. Whilst pension funds are economically important, they are not politically important enough."
The Summit will bring pension experts together to discuss the impact of the standards, and how they can be improved. The results will be published prior to the fundamental review of pensions accounting planned by the International Accounting Standards Board (IASB) towards the end of 2011.
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