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 2020.
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.
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.
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