This note is for those involved in preparing and auditing pension disclosures under Accounting Standards FRS102 (UK non-listed), IAS19 (EU listed) and ASC715 (US listed) as at 30 June 2022. 

It covers 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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Key topics

  • IAS19 positions improve as yields rise: Since 30 June 2022, most schemes have likely seen an increase in their IAS19 funding level, with immature schemes and those with lower levels of interest rate hedging having fared particularly well.
  • Surpluses, IFRIC14 and asset ceilings: The improvements in funding levels mean many schemes may find themselves with accounting surplus at the next balance sheet date, possibly for the first time under the current versions of the accounting standards. 
  • Impact of Covid-19 on pension scheme demographics: The Continuous Mortality Investigation (CMI) has estimated that there have been approximately 120,000 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.

Further topics featured include:

  • IAS19 disclosure requirements
  • Setting discount rates under the accounting standards
  • Inflation based on RPI and CPI
  • Mortality assumptions

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