Current issues in pensions financial reporting - 30 September 2021

This note is for those who will be involved in preparing and auditing pension disclosure under Accounting Standards FRS102 (UK non-listed), IAS19 (EU listed) and ASC715 (US listed) as at 30 September 2021.  

We look at the current topical issues as well as the considerations for company directors when setting assumptions, and for auditors in determining whether the assumptions are appropriate. 

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What topics are covered?

• Improvements in IAS19 positions
  Since 30 September 2020 most schemes have likely seen a significant improvement in their IAS19 funding level
• Impact of Covid-19 on pension scheme demographics
  The CMI estimates there have been 100,000 more deaths in the UK than would have been expected since the start of the pandemic. But this is unlikely to mean a significant reduction in pension scheme liabilities.
• Changes from RPI to CPIH in 2030
  It is widely expected the change to the RPI inflation statistic will take place in 2030, meaning that inflation assumptions will need to be reviewed. 
• GMP equalisation
  Recent judgements will require companies to estimate the impact on each individual scheme's liabilities, and potentially recognise a further P&L charge. But the magnitude should be much lower than the cost recognised following the 2018 judgement.

Further topics featured include the below. 

• Amendments to the IAS19 accounting disclosure requirements
• The discount rate
• RPI and CPI inflation assumptions
• Mortality assumptions

Read our briefing note to stay up-to-date with the latest issues in pensions financial reporting.