Accounting for Pension Costs Survey 31 December 2014

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

The analysis is designed to help companies in formulating their own assumptions under IAS19 (or FRS17).

The survey shows that while 2014 saw a significant drop in discount rates, the funding levels for many companies remained consistent compared to previous years. This was disappointing news for companies who have made substantial deficit reduction contributions over the year.

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 decreased by 0.9% p.a. when compared to 2013. This has resulted in an increase to 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 2014.