Currently, under FRS17, organisations with USS liabilities that are unable to identify their share of a pension scheme’s assets and liabilities are able to account for their liabilities on a defined contribution (DC) basis.
This means that these organisations may be recording a pension expense equal to the contributions which they are required to make to their schemes in their company accounts. As a result the pension scheme asset or liability does not appear on the organisation’s balance sheet.
However, the introduction of FRS102 for accounting periods commencing on or after 1 January 2015 will impact these organisations, and could require recognition of additional liabilities even if a DC accounting basis is used. Specifically, where a commitment has been made to a deficit recovery plan for a pension arrangement, a liability equal to the present value of those future deficit payments will need to be recognised on the balance sheet and any changes in this recovery plan following a valuation would need to be recognised as an additional pension expense (or credit).
We recommend these organisations start planning for any change as early as possible by speaking to their auditors and their pension advisers to understand the potential size of the additional liabilities.