New rules threatening final salary schemes

first_img Previous Article Next Article New rules threatening final salary schemesOn 19 Feb 2002 in Personnel Today Comments are closed. Companies are increasingly likely to end their final salary pension schemesbecause of concerns over new accounting rules. A survey by the National Association of Pension Funds shows more thanthree-quarters of firms with final salary schemes are considering ending thembecause of the FRS17 accounting standard. The standard will require companies to show the assets or liabilities oftheir pension schemes in their internal accounts. NAPF chairman Peter Thompson said: “We have been warning for some timethat FRS17 would drive many employers from providing defined benefit pensions,and that is what is happening. “NAPF has always supported better disclosure of relevant information,and would welcome an accounting standard which reflects the long-term nature ofany pension promise. But bringing snap-shot accounting into the accounts of thesponsoring company will not only invite confusion among investors, but willlead firms to question whether it is worth their while continuing to offer agood quality final salary pension scheme.” Thompson said several final salary pension schemes have already closed tonew employees and, in some cases, to existing employees with FRS17 being citedas the main reason. NAPF called for the Accounting Standards Board to have a re-think on the wayFRS17 is being introduced to try and ease employers’ concerns. “On top of other pressures facing company pension scheme providers,FRS17 will too often prove the final straw which drives firms away fromoffering such schemes. In doing so, it will jeopardise the Government’s aim ofreversing the present 60 per cent state 40 per cent private split of pensionprovision and threaten the retirement incomes of thousands of tomorrow’spensioners,” said Thompson. Ben Willmott Related posts:No related photos.last_img read more

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