Accounting rules for pensions branded "meaningless"

Inadequate representation of pension deficits is creating confusion, a new report suggests.

Funded by the ICAEW Charitable Trusts, the Pensions Institute (Cass Business School) study concluded pension rules are misleading users.

A key issue is the use of a single number to represent pension deficit, which does not take account of variables such as life expectancy.

Director of the Pensions Institute Professor David Blake told AccountingWEB: "Forecasts are only helpful if we understand the uncertainty around them.

"A single number cannot convey useful information about the distribution of future outcomes."

The website noted that, at the moment, companies account for their defined benefit pension plans by predicting the flow of future payments required.

These future payments are discounted back to their current value and netted off against pension fund assets.

Cass Business School is located close to the City of London and offers a range of courses from undergraduate to PhD.