Accounting for Pension Costs Survey 31 December 2013

Our thirteenth annual survey of the assumptions adopted by FTSE100 companies for determining the value of their pension liabilities for accounting purposes has been released.

The survey shows that while 2013 saw the highest average funding level for five years, the position is some way off the peak in funding levels seen in 2007. This is despite record contributions being made by companies to close deficits over the same period.

The key financial assumptions required for determining pension liabilities under the Accounting Standards FRS17 (UK non-listed), IAS19 (EU listed) and FAS158 (US listed) are the discount rate and the rate of future inflation.

Our survey showed that the average discount rate had increased by 0.1% p.a. when compared to 2012, which is in contrast to what we’ve seen in recent years. The reversal of the trend of declining discount rates has helped to reduce pension scheme deficits this year.

This survey is based on data in the published accounts of FTSE100 companies with financial years that ended on 31 December 2013.

To read the report in full please open the link below.