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- The FTSE 100 companies employ between them some 3.5 million people in the UK. They have pension assets worth about £220 billion. Their annual pension cost of over £3 billion equates to a little less than £1,000 pa for each employee.
- This is Lane Clark & Peacock's eighth publication of "Accounting for Pensions", an authoritative survey of practice under SSAP24, the standard that currently regulates pension cost accounting and disclosure of pension information in UK company accounts.
- Whether or not it is in response to our previous surveys, we are pleased to see significant improvements in disclosure again this year. During 2000 eighteen companies improved their disclosure, and now twenty-five score the maximum in our ranking compared to thirteen last year. This contrasts with just three when we first began to prepare this survey. However, a small minority continue to disclose inadequate information.
- With FRS17 affecting disclosures in Company accounts for accounting periods ending after 22nd June 2001, we look at the potentially huge impact the new accounting standard will have on companies' balance sheets and reported profits.
- Traditional actuarial valuation methods are in retreat, for accounting purposes at least, with the majority of new valuations being carried out on a market-based approach. It is no coincidence that this is happening at a time when the outlook for future investment returns is perhaps less optimistic than only a few years ago. We look in detail at this trend and the contrasting actuarial assumptions being made.
- The trend to defined contribution continues. Many of the newer entrants to the FTSE 100 only have defined contribution pension arrangements, and a few of the older companies have closed their long-standing final salary schemes to selected groups of new entrants. A new breed of hybrid pension plans, which can offer some of the advantages of both traditional defined benefit and defined contribution plans, is also emerging.
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Introduction
1. Summary
2. Introduction and main findings
3. FRS17 to replace SSAP24
4. Market value methods
5. The continued defined contribution trend
6. Detailed analysis of Reports and Accounts
6.1 Disclosures
6.2 Actuarial assumptions
Appendix 1 - Glossary of terms*
Appendix 2 - Detailed disclosure listing
Appendix 3 - Summary of FRS17
