Posts Tagged ‘Accounting’

Richard Smith

At the risk of showing both my age and my teenage self’s film preferences, I have to confess I enjoyed a bit of Bill & Ted and their musical adventures through time. One of the scenes I recall from the second film was an evil Easter Bunny, pursuing our terrified heroes through the underworld. It was incongruous how a loveable character could be portrayed in such a scary manner. But what’s that got to do with pensions accounting?

Back in November I wrote a blog about my expectations for accounting disclosures for companies reporting at the calendar year-end. Many recent events have proved the foolishness of attempting to predict the future, but (unfortunately perhaps in this case) taking an educated guess at the broad size of upcoming accounting deficits was fairly straightforward back then. Sadly, it made uncomfortable reading, and I predicted that pensions deficits would be an unpleasant surprise in the FD’s Christmas stocking.

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Richard Smith

With 31 December being the most common date for corporates to have their year-end, Finance Directors will soon be turning their minds to their annual accounts. After a number of years of falling yields and growing deficits, they might be hoping for a Christmas present of an easing of the pensions problem, particularly if they have read recent headlines around improving pension scheme funding levels

Whilst there is still some time before the year-end, and (as the US election has recently reminded us) anything can happen, we will aim to give sponsoring employers advance warning (unfortunately this wording is chosen deliberately) of what they can expect come the year-end. Read more »

Neil Buchanan

Our latest report details market movements over the 3 month period to 30 June 2016, and how this impacts the key financial assumptions required for determining pension liabilities under FRS102 or IAS19.

Major asset classes have had a relatively strong performance over the 3 month period to 30 June 2016. This strong performance follows on from the similar growth experienced in the Q1 of 2016. However, these asset classes have had their value distorted somewhat by ‘Brexit’ in the final week of the quarter. Furthermore, it is likely that any investment gains will be more than offset by increases in schemes’ liabilities (as a result of lower bond yields due to investors’ “flight to quality”), resulting in lower funding levels. To help draw attention to the practical implications, the effect of these market conditions have been illustrated on a typical pension scheme.

Finally, we also review the recent Brexit vote and how this will likely impact upcoming FRS 102 or IAS19 valuations.

Download your report now
Neil Buchanan

Our latest report details market movements over the 3 month period to 31 March 2016, and how this impacts the key financial assumptions required for determining pension liabilities under FRS102 or IAS19.

Major asset classes have performed reasonably well during Q1 of 2016. While equities had a shaky start to the year, they have bounced back to levels similar to those at the end of 2015. Corporate bonds and gilts have also experienced positive returns over the period. However, it is not all good news as it is likely that any investment gains will be more than offset by increases in schemes’ liabilities (as a result of lower bond yields), resulting in lower funding levels. To help draw attention to the practical implications, the effect of these market conditions have been illustrated on a typical pension scheme.

Finally, 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 now.

Neil Buchanan

Our latest report details market movements over the 3 month period to 31 December 2015, and how this impacts the key financial assumptions required for determining pension liabilities under FRS102 or IAS19.

Major asset classes have had a mixed performance during Q4 of 2015. While equities and corporate bonds have bounced back from previous lows in Q3, gilts have not enjoyed this resurgence. To help draw attention to the practical implications, the effect of these market conditions have been illustrated on a typical pension scheme.

In addition, many scheme sponsors could be concerned as pension costs charged through the P&L will continue to rise due to the changes in the pensions accounting standards. (Further details on these changes can be found here ).

Finally, 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.

Richard Smith

FRS102 An Employers Guide

FRS 102 – a quick recap

You may think I am a bit late to the party to be releasing a guide for Financial Reporting Standard 102 (FRS102) and its effect on accounting for pension costs, given that the first edition of the new standard was released in March 2013, and subsequently updated in August 2014.

However, as FRS102 only came into play from 1 January 2015 and we are now approaching the end of the transition year in which companies are required to restate the prior year’s disclosure under this new standard, many companies will only now be thinking about this in earnest for the first time, and so I believe there is no better time to consider the similarities and differences with the previous standard, FRS17. Read more »

Neil Buchanan

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.

Andrew Kitchen

Having witnessed strong returns on assets over the last 12 months, many scheme sponsors could be, optimistically, looking forward to reporting improved balance sheet positions in 2015. Unfortunately, record low bond yields are likely to have more than offset these gains for most schemes due to their effect on liability valuations. Pension costs charged through the P&L will continue to rise, with further increased charges likely next year as a result of forthcoming changes in pensions accounting standards.

In this Spence Special Report on Pensions Accounting, we describe the asset/liability balancing act in light of market movements over the past year. 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.

David Davison

All organisations participating in multi-employer defined benefit pension schemes need to carefully consider how the introduction of the new Financial Reporting Standard 102 will impact upon their organisation and carefully assess what options are open to them. The new accounting requirements will see many organisations who do not currently record their defined benefit pension liabilities having to do so for the first time.  This could have a very material impact on balance sheets.

Organisations who already account for their scheme as a defined benefit scheme need to consider if the new legislation provides them with alternatives to their existing disclosures.

Alan Collins, Director and Head of the Employer Advisory practice at Spence, has compiled a Guide which analyses who the changes will affect, what the changes will mean and what steps to take in preparation for them. The Accounting disclosures under multi-employer pension schemes Guide is available to download here.

Alan Collins

With recent market turmoil sending scheme funding levels tumbling, pensions present a potential Pandora’s Box for even the most enlightened Finance Director.

In this month’s issue of CA Magazine (pg. 56) Alan Collins, head of employer advisory services at pension actuaries Spence & Partners suggests 10 key questions that Finance Directors should be asking themselves about their defined benefit schemes and some guidance on each of these key issues.
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