ASB recommendation 'to frighten shareholders'

News Article - 25 January 2007
Category: Business

New disclosures outlined in the Accounting Standards Board's (ASB) recently published statement on final salary pension schemes will frighten shareholders, it has been claimed.

According to consultancy firm Aon Consulting, the recommendation that companies disclose their buyout profits to increase transparency is inconsistent with company accounting and only applies if the scheme comes to an end, Accountancy Magazine reports.

"The value of other company assets and liabilities would change dramatically if the company had to disclose their value on company break-up for immediate settlement,' said Donald Duval, chief actuary at Aon Consulting.

He added that it was a bizarre move for the ASB to target pension funds alone rather than looking at businesses' other assets too.

The company has claimed that the total deficit for the country's 200 largest pension schemes would be somewhere in the region of £200 billion, with 40 of the firms finding the sum to be larger than their sponsoring employer's net assets.

Mr Duval added that if shareholders were not frightened before, it is likely they would be now.

The ASB issued its statement earlier this week after reviewing how businesses should disclose their final salary pension funding arrangements.

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