Current Issues in Pensions Financial Reporting – 30 September 2020

Here are some of the key areas tackled in this report:

• Discount rates are likely to have fallen by 50bps since the start of 2020, which will have increased accounting liabilities.
• This means accounting positions are likely to have deteriorated since 31 December 2019 and companies with 31 December 2020 year-ends should start considering the likely impact on their balance sheets
• Although Covid-19 has led to a significantly higher level of mortality up to Q3 in 2020, this is unlikely to have led to material reductions in liabilities for schemes in general
• We are waiting for the government to confirm the next steps following its consultation on aligning RPI with CPIH. In the event this comes before the year-end companies will need to consider the impact on assumptions
• It is possible that a further judgement on the Lloyd’s bank GMP equalisation case and the treatment of past transfers will come out before the year-end, and this could result in additional liabilities and P&L charges to be recognised.