The final meeting of the IASB's Standards Advisory Council in 2007 was memorable for two reasons. First, participants, including the German delegates, were required to stand and observe a one-minute silence to honour British war dead. Second, of particular interest to those Belgian entities hit by a recent IASB decision to treat that country's pension plans as back-end loaded, was an exchange between the head of the European Commission's accounting unit, Jeroen Hooijer, and IASB member John Smith.

Responding to a question from Smith, Hooijer said he was "shocked that a senior board member would ask ‘what is an impact assessment?' We have been discussing this for two years." To those who witnessed the encounter, the idea that the board has failed to heed Hooijer's warning that it must consider the impact of its standard setting activities comes as little surprise.

The prescience of Hooijer's intervention is apparent from even a cursory review of the constituent comment letters on the board's abortive 2008 discussion paper proposals.
Commenting on those proposals last year, ahead of recent IASB re-deliberations, the chairman of AFRAC, the Austrian national standard setter, Romuald Bertl noted: "We had high hopes of the discussion paper, and were disappointed when instead of attacking the roots of the problem, it merely applied palliatives to the symptoms. It is precisely these measures that are having unpleasant side-effects here in Austria and are making our situation even worse."

Appearing to presage recent board decisions, Bertl concluded: "Already at this stage there should be discussion of transitional provisions, because - especially in Austria - the changes in IAS19 can be expected to have a major impact."

He was not alone. In an unusual intervention, Piet Hein Donner, the Dutch minister for social affairs, added his voice: "In the Netherlands, most pensions schemes are average salary with conditional indexation. The conditional nature of the indexation implies that participants carry a large portion of the risk as to whether or not indexation will take place. As a rule, a decision on whether or not indexation will be applied must be taken every year by the board of the pension fund."

Donner continued: "Finally, the Dutch Pensions Act offers the opportunity to reduce the accrued right of members and beneficiaries (including early leavers). This leaves the ultimate risk with members and beneficiaries. In their annual accounts, companies clearly have to recognise commitments to which they can be held, including promises to make additional payments in the event of insufficient coverage. 

"However, a true and fair view is not presented, to my mind, if a reporting standard compels employers to carry liabilities in their balance sheet in excess of those to which they can be held either on the basis of a legal obligation or a contract with the pension provider."

Much of this thinking, if not the specific fact-pattern and legal framework will be familiar to the Belgian pension plans now facing what AON consultant Régis Renard called a "catastrophe". As for the broader issue of IASB due process, it suggests that Hooijer, Bertl and Donner were engaged in a dialogue with the selectively deaf - a lottery where there can be only one winner.

More troubling for the UK final-salary schemes is the surprisingly uncritical approach adopted by the department of Business, Innovation and Skills (formerly BERR).
Among documents obtained by IPE using the Freedom of Information Act 2000, are notes of a series of telephone calls between IASB press officer, Mark Byatt, and the head of BERR's accounting unit. The telephone conversations took place last October against the back-drop of a EU threat to carve out of IFRSs various accounting treatments relating to financial instruments.

What is surprising in itself is the fact that a UK government representative felt it appropriate to receive information from a press officer. More worrying is the failure by the BERR civil servant to question why the IASB risked antagonising the Commission.
With such uncritical oversight of the IASB, UK pension plan sponsors might do well to shift their focus to Europe. Tiring of the IASB's intransigence on a range of issues, including financial instruments accounting, the EU has mooted the possibility of taking a power under EU law to carve in accounting requirements to EU law as well as out. The soon-to-be-removed SORIE in IAS19 might be one place to test that new power.