UK firms reject ASB pension proposals

News Article - Thursday, July 17, 2008

filed under: Regulatory

The Accounting Standards Board's (ASB) efforts to see company pension schemes recorded differently have met with opposition from UK businesses.

According to Accountancy Age, the majority of enterprises fear switching present pension asset estimates to a so-called 'risk-free rate' - assumed to be equivalent to that of government bonds - will produce lower valuations of a pension fund.

Currently they are calculated using safe AA corporate bond rates.

The Department for Work and Pensions tells the publication: "They [the proposals] are detrimental to the perceptions of employers running defined benefit schemes and to those of their investors."

While UK firms have largely shifted allegiance from ASB rules to those set by the International Accounting Standards Board (IASB), the former still retains a lot of influence in pension accounting

In related news that may interest those looking to install accounting software, pensions minister Mike O'Brien told the Daily Telegraph earlier this month he will make "representations" to the ASB after leading City figures complained the changes could spell the end for defined benefits schemes.

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