ASB plans changes to pensions accounting

Date: 31st January 2008

The Accounting Standards Board (ASB) has issued a discussion paper to address the issue of the final reporting of pensions.

According to the ASB, "the time is right" for a review of techniques governing the calculating and reporting of pension fund assets and liabilities.

"The current generation of pension accounting standards have served the financial community well but, with the benefit of our experience of applying these standards, the time is right for a fundamental review by the IASB [International Accounting Standards Board] and the FASB [Financial Accounting Standards Board]," said ASB chairman Ian Mackintosh.

Mr Mackintosh added that the ASB is expecting a "wide response" to the issues highlighted in the discussion paper, which he claims presents a "coherent set of proposals".

Among the proposals highlighted in the ASB discussion paper is the use of a risk-free rate for measuring liabilities, rather than a high quality corporate bond rate, which it is believed would lead to bigger liabilities.

Comments on the paper are welcomed until July 14th 2008, following which a proposal will be issued by the IASB and FASB.

According to its website, the ASB is responsible for issuing accounting standards.