With the introduction of new UK Generally Accepted Accounting Practice (UK GAAP), and subsequently, the introduction of Financial Reporting Standard 102 (which replaces Financial Reporting Standard 17 as the financial reporting standard in the UK and Ireland) we ask employers to consider the impact this may have on their P&L and balance sheet, and note some actions employers can take to limit this impact.
The most significant change under new UK GAAP for defined benefit pension schemes is in relation to non-segregated multi-employer arrangements where employers are unable to identify their share of the assets and liabilities in the Scheme. Under old UK GAAP (and hence FRS 17) there was a exemption that allowed employers in this position to account for their pension costs on a defined contribution basis, by recording the contributions paid to the scheme in the profit and loss account. No account had to be taken of any pension deficit that may have existed at that date. Read more »
In a recent article from Pensions Age, Laura Blows looks at the very lucrative, but potentially very short, careers placing individuals in quite unusual circumstances when preparing for their retirement. Sportspeople, dancers, singers and reality TV stars are just some of those that may have high volumes of money to invest during the short lifespan of their lucrative careers. The issue is making the investments last throughout their very long ‘retirement’.
Alan Collins was on hand to comment and warns that with high volumes of cash to invest up front, the key will be to do so as tax efficiently as possible. While the fame may last only for 15 minutes or so, investing for and living through retirement will inevitably last a lot longer. Read the full article here.
Effective pension scheme governance is a necessity for any well-run scheme and is an area the Pensions Regulator scrutinises closely. It covers a broad spectrum of controls that together build a framework to help Trustees create, manage and realise their long-term objectives.
For scheme governance to be effective it has to be constantly managed and assessed in a proactive way – it should not be a tick box exercise once each year. If managed in this way, it can have a significant positive impact on the ongoing management of the scheme.
Here are the five key areas we believe trustees need to focus on:- Read more »
Our latest special report details market movements over the 6 month period to 30 September 2015, and how this impacts the key financial assumptions required for determining pension liabilities under FRS17, FRS102 or IAS19.
Major asset classes have performed poorly over the 6 month period to 30 September 2015. However, depending on your schemes’ investment strategies, any loses from investment returns may well have been more than offset by decreased balance sheet liabilities, resulting from higher bond yields. To help draw attention to the practical implications, the effect on a typical scheme is illustrated.
We also review recent developments in the arena of pensions accounting, highlighting issues that may be of interest.
Click here to download your Pensions Accounting Update.
A change in practice by local government pension scheme Lothian Pension Fund (‘LPF’) outlined in a recent Bulletin has finally looked to rectify a long standing anomaly with pension schemes of this type.
Many charities joined LGPS as a result of outsourced arrangements from local authorities or other public bodies. These arrangements resulted in the transfer of staff from the local authority and allowed these staff to continue their pension provision.
Unfortunately Funds were unable to segregate the service for these individuals between the two employing bodies which meant that the later employer, usually a charity, inherited all the liabilities. Read more »