Spence launches online FRS102 liability calculator for charities in multi-employer DB schemes

Rebecca Lavender

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PRESS release: 09 OCTOBER 2014

Spence & Partners, leading actuarial advisers to the charitable and social housing sector, has launched an online calculator and Guide to help organisations assess the likely impact of the introduction of FRS102.

David Davison, Head of Public Sector, Charities and Not-for-Profit Practice at Spence & Partners commented: “The introduction of the new pension reporting rules will require organisations to fully disclose their multi-employer pension scheme liabilities in their annual accounts, many for the first time.  We have launched this online calculator to help organisations as they try to get a handle on this new pension scheme accounting standard and identify what the likely position will be for them. This will be a challenge, particularly for charities in multi-employer schemes, who up until now only needed to record the value of their DC contributions.

“The calculator will allow schemes to enter their deficit recovery contributions and recovery period and obtain an estimate of the net present value figure* they’ll likely have to include on their balance sheet. Based upon this, the calculator will also provide a proxy figure for a full disclosure equivalent to that currently derived under FRS17**. This will help charities and other organisations participating in multi-employer schemes see the potential financial impact of disclosure early on and help them plan any steps needed to protect the balance sheet position. The steps could be relatively straightforward, but for others, particularly those where this change could have a material impact on their balance sheet, more bespoke action could be required. Charities, for example, might like to consider designating funds in the next financial statements to cover any agreed deficit reduction payments to minimise the effect on free reserves when FRS102 comes into effect.”

Davison added: “Although FRS102 only comes into force for accounting periods on or after 1 January 2015, the information and planning required means the issue should really be being considered now. The calculator will allow multiple calculations to be carried out and it can also be saved and printed. We believe it, and our technical guide, will provide access to a valuable resource for charities to better understand their obligations.”

The calculator can be found here www.spenceandpartners.co.uk/FRS-102-liability-calculator/. The technical guide which explains the technical details of the new accounting disclosures and the key choices charity financial directors are likely to face is also available at www.spenceandpartners.co.uk/multi-employer-accounting-disclosures/.

* The value of outgoing cashflows, discounted back to the present date, using a discount rate

** An accounting standard used to assess the balance sheet impact and pension costs associated with the operation of occupation pension schemes

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