Accounting for pension costs survey 31 December 2015

Published by Martin Hooper on

Our fifteenth 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 and FRS102.

Our survey shows that the average discount rate at the end of 2015 increased by 0.2% p.a. when compared to 2014. This helped to partially reverse the substantial fall in discount rates witnessed in 2014 and was aided by long-term inflation expectations remaining stable. This was an important factor in IAS19 deficits falling for the majority of companies in our survey.

Other highlights:

  • overall deficit reduced by over £15 billion
  • real salary assumptions remain low
  • proportion of investments allocated to risk assets fall for DB schemes
  • funding levels still remain below those seen in 2006 and 2008

This survey is based on data in the published accounts of FTSE100 companies with financial years that ended on 31 December 2015.

Accounting for pension costs survey 31 December 2015