Heading the agenda for Towers Watson IAS 19 specialist Eric Steedman is the impact on the 2011 changes to the recognition, measurement and disclosure requirements of International Accounting Standard 19, Employee Benefits. “The one that is top of my list is the effect of IAS 19 and the new disclosures on pensions reporting. I think there are two levels to this. From a technical perspective first, people will be analysing how companies are looking at risk and disclosing it,” he says.

“But maybe the more significant point is whether these new disclosures will bring about any changes in behaviour. In other words, will there be acceleration toward derisking and changes to benefit design? The proof of cause and effect probably won’t be there, but it will be interesting to see if companies start to think more about risk and what they do about it.”

Although the focus among companies has been on preparing for the new disclosures, he explains, the real question is whether or not behaviours will change once this information is out in the marketplace: “One could hypothesise that the move to the net interest approach and the scrapping of the corridor in IAS 19 will mean that companies derisk from an investment perspective. That trend is already there, and so it will be very hard to prove what impact the accounting has had. However, the changes to the accounting can only reinforce that trend.”

At Aon Hewitt, consultant actuary Simon Robinson warns that we have yet to see how the new disclosure requirements will pan out: “I don’t know if it’s a big issue but I think it will turn out to have been more onerous than companies were expecting. Old IAS19 was very much a checklist approach, whereas this is more of a qualitative approach. It is no longer a case of disclosing a bunch of numbers to meet the disclosure objective.

“One way it might go is that companies struggle with it, or they struggle to comply adequately. Taking the UK as an example, any summary of the UK legislative environment will likely be fairly boilerplate and not particularly helpful. So although companies might get into the mindset and start to disclose lots of useful information, my feeling, so far, is that companies are not inclined to do more than they have to.”

Another hot-button topic, both consultants agree, is work by the International Financial Reporting Standards Interpretations Committee on an accounting approach for contribution-based promises. Steedman explains: “Although the IFRS Interpretations Committee’s current work is not relevant to everyone, its decision to look again at contribution-based promises will matter if you are running a plan that is affected by those discussions.” That effort, he adds, while it might run into the sand, could also result in a new approach for the valuation of certain pension liabilities.

“Another interesting one is discount rate setting. My own sense is that the various deliberations over the last year that resulted in the IFRIC coming to its ‘non-decision’ on discount rates will restrain a divergence of approach that could otherwise have happened. Even so, I expect companies to scrutinise their discount-rate assumptions to see where they are at and where they could be at.”

Similarly, Robinson takes the view that any consideration of contribution-based promises invariably leads to the question: what should the IAS 19 discount rate objective be? “I think this will rear its head again and I expect it to be quite a big topic this year. As for where it is going, it will either fizzle out in the way that IFRIC D9 did all those years ago or, alternatively, it will have implications for pensions accounting more widely,” he says.

“Fundamentally, I don’t see how the board can address contribution-based promises without making wholesale changes to IAS 19. And as soon as you start to do that, you end up looking at discount rates. This is especially the case if you use option-pricing techniques to value guarantees. Then you run into the problem that the IAS 19 AA rate is fairly arbitrary, as well as the disconnect between DB and DC accounting.”