The Pensions Research Accountants Group has set out its goals for the future as it celebrates 40 years in existence.

PRAG was established in 1976 by a group of volunteers to provide accounting guidance to the pensions industry. Forty years on, PRAG still publishes the Pensions Statement of Recommended Practice (SORP) setting out the accounting requirements for pension schemes.

The group also publishes guidance to help members keep pace with the ever-changing pensions landscape, covering many topics including de-risking strategies, investment reporting, asset backed contributions, actuarial liabilities and DC regulations and chair’s statements.

Looking forward, PRAG chair Shona Harvie explained that most trustees will have now signed their first set of accounts under the new SORP, therefore, PRAG will be seeking feedback on the implementation of the requirements and consider the potential for future development, including the differing needs of both DB and DC schemes.

“Undoubtedly, in the second year of implementation, there will be some consolidation and improvement as practice develops,” she said.

As it continues, PRAG will continue to support its members by issuing guidance where it is needed, in new areas such as the development of the annual reports to clearly demonstrate good stewardship and scheme governance; the transparency of investment management costs, following the developments in the new disclosure requirements and the transparency of scheme running costs, with the added complexity of the implications of the proposed VAT changes next year.

It will also issue guidance on the consideration of the controls that trustees and their service providers should have in place to mitigate the risk of a cyber-attack; the challenges faced by master trusts due to increasing regulation and high member volumes and key management information to help trustees govern their schemes and to make decisions effectively.

PRAG was formed in response to the Accounting Standards Committee review of pension costs in employer’s accounts and there were also concerns that pension scheme accounts would be adversely impacted by company accounting requirements. It was felt a clear understanding of the long-term nature of pension schemes was needed there were differing views on whether actuarial liabilities should form part of pension scheme accounts.

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