There are a number of considerations for company directors with a 30 June year-end to take into account when setting these assumptions and for auditors in determining whether the assumptions are appropriate.
Some of the technical issues relevant to those involved in the preparation and the audit of pension disclosures are covered in detail.
Key findings include:
- Schemes with high levels of interest rate hedging are likely to see an improved position compared to the previous year end. In contrast, those scheme with high allocations to growth assets may have seen their IAS19 funding position deteriorate
- The latest Continuous Mortality Investigation (CMI) 2018 mortality projection model leads to lower life expectancies and a reduction in liabilities if the core parameters are used. There could, however, be greater focus on whether the core parameters are appropriate for individual scheme as there is evidence that life expectancy for occupational pension scheme members is improving faster than the general population
- Changes to IAS19 mean that those companies with reporting dates from 31 December 2019 onwards may be required to recalculate current service cost and interest cost following a plan amendment, curtailment or settlement, based on updated assumptions and asset values. Where Companies are planning (or have already carried out) exercises which count as a plan amendment, curtailment or settlement they should ensure they understand the potential impact on their accounting position of the changes.
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