IASB admits need for better pension accounting
GLOBAL – The head of the International Accounting Standards Board has recognised that existing accounting standards for pensions need to improve.
“Pension costs are one of the most complex and obscure areas of accounting, and the IASB recognises the need for improvement in existing accounting practices throughout the world,” said the body’s chairman Sir David Tweedie.
But he added: “A comprehensive review of current pension accounting will take time.”
The comments come as the IASB has put forward proposals to amend the existing IAS19 pension standard to bring it into line with mark-to-market standards such as the UK’s FRS17.
“This specific proposal is meant to reduce implementation costs for companies adopting international standards and to enable companies to continue with what many consider to be a more transparent approach to pension accounting,” Tweedie said.
The IASB said that the proposal would enable companies that already show the surplus or deficit in full under FRS17 and are adopting International Financial Reporting Standards to continue with their present policy.
The IASB said it is also considering undertaking a “comprehensive project” on post-employment benefits. This would look at fundamental aspects of measurement and recognition.
Until this review is completed, the IASB will continue to permit, under IAS19, companies to recognise actuarial gains and losses either in the period in which they occur or spread over the service lives of the employees.
Almost all entities currently using IAS19 choose to spread actuarial gains and losses.