ASB votes on pension liability disclosures

News Article - 18 December 2006
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The Accounting Standards Board (ASB) has voted in favour of publicly declaring pension liabilities at their buy-out value.

Companies were advised to declare their expenditure on the insurance of liabilities by purchasing annuities.

The move was made in a bid to enhance transparency and aid investors in understanding the risks of pension schemes.

Some six principles have been outlined by the ASB as part of the statement. These cover the main assumptions used to measure liabilities, the relationship between the business and trustees, how liabilities are measured, future funding obligations and the risks which arise from financial instruments.

The statement, while not being compulsory for implementation, aims to encourage businesses with defined pension plans to help investors by making information available to them more fully.

Ian Mackintosh, chairman of the ASB, said: "As a best practice guide the reporting statement allows preparers the flexibility to provide disclosures appropriate to the risks their company is exposed to."

Earlier this month the ASB agreed to publish its Retirement Benefits – Disclosures standard as a best practice guide for any business operating a defined pension scheme.

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