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Pensions accounting debate set to run – JLT

GLOBAL – Imminent agreement in the heated debate over accounting standards for pensions is unlikely, says a top consultant at Jardine Lloyd Thompson.

“Accounting standards are intended to be dispassionate recording mechanisms,” said Roger MacNicol, consulting director at JLT in Glasgow. “Their purpose is to allow financial analysts to assess properly corporate pension commitments.”

“Yet, they can be the subject of heated debate. Some pension professionals have expressed concern that standards that use volatile (and, they assert, occasionally over-conservative) valuation assumptions to assess pension costs may cause companies to reduce the benefits provided under their defined benefit arrangements or to abolish them altogether.

“Others insist that to use anything other than a (necessarily volatile) market-driven basis will lead to the systematic misstatement of costs. Agreement seems unlikely to be imminent.”

MacNicol, who joined JLT from KPMG last year, made the comments in an article in the ‘Encyclopedia of Actuarial Science’, to be published by Wiley in October.

The book, which has 318 contributors and was edited by Jozef Teugels and Bjorn Sundt, aims to be a “timely and comprehensive body of knowledge designed to serve as an essential reference for the actuarial profession”.

Earlier this week JLT named Eddie McGuire as managing director of Glasgow-based JLT Benefit Solutions Scotland.

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