PRAG rejects ASB proposals on scheme accounts

The research group’s formal response to the ASB’s discussion paper on accounting for pensions – released this week – said the accounting standards body proposes to make pension schemes general purpose financial statements which include information on the funding position of the scheme.

Pension schemes currently produce summary funding statements for members – and PRAG said there was "no evidence" to suggest that any change to the existing approach is asked for by the users of pension scheme accounts.

PRAG warned that the fair value of the liability would differ to the value already communicated to members and the value being used by the trustees to agree the contributions with the employer.

It said this would only confuse members rather than provide valuable additional information – and could also increase scheme costs.

In a statement, PRAG explained: "The inclusion of the liability will add to the costs of the scheme.

"In addition to actuarial, audit and management time, this will potentially include the costs of specialists to assess the strength of the employer covenant."