Analysts’ concerns pensions liabilities ‘understated’ in IAS accounts
UK - A sizeable proportion of City analysts regard pension liabilities disclosed in a corporate's accounts under IAS19 as an underestimate, according to a survey among 150 UK-based firms.
While 47% of responses regarded the disclosed liabilities as a fair estimate of the true liabilities, 41% regarded them as an underestimate, with the remaining 12% considering them to overstate the true liabilities.
"This may indicate that companies with large pension liabilities are possibly seeing a greater impact on their share price than the IAS numbers might suggest," say Pensions Capital Strategies PCS), an advisory firm which undertook the survey.
In assessing the value of a company, 70% of analysts responding always include the net pension surplus / deficit.
Nearly all of the 40 analyst responding (97%) would like to see pension scheme solvency positions disclosed to shareholders.
A high proportion (86%) would favour information on key pensions scheme ‘balance of powers', such as funding and wind-up disclosed to shareholders.
On a more general note, most analysts (84%) say they would view a switch from equities into bonds of pension, which would reduce finance income to the P&L and consequently earnings per share, as being "financially neutral"; 16% felt it would be negative.