Introduction
1. Summary
2. Introduction and main findings
3. Pension accounting in turmoil
4. The fate of the defined benefit scheme
5. Detailed analysis of SSAP24 disclosures
5.1 Disclosures
5.2 Actuarial assumptions
6. Detailed analysis of FRS17 disclosures
6.1 FRS17 results and key assumptions
6.2 FRS17 and balance sheet risk
Appendix 1 - Detailed SSAP24 disclosure listing
Appendix 2 - Detailed FRS17 disclosure listing
Appendix 3 - FRS17 risk measures
Accounting for Pensions Survey 2002
Appendix 3 - FRS17 risk measures
We list below the companies that disclosed FRS17 numbers in 2001, in decreasing order of pension scheme size relative to the net asset value of the company.
A large pension scheme coupled with a low ratio of assets to liabilities represents a significant issue for the company concerned. However, these figures should not be viewed in isolation. The final column shows the percentage of the assets of the pension scheme that are invested in equities. A high percentage in this column coupled with a large pension scheme means that the company is particularly exposed to a fall in the equity market. For such companies, FRS17 represents a significant risk even if the pension scheme is currently in surplus.
| Company | Size of scheme relative to size of company 1 % |
FRS17 ratio 2 % |
Percentage of assets in equities % |
|---|---|---|---|
| ICI | n/a3 | 96% | 31% |
| Rentokil Initial | n/a3 | 103% | 79% |
| Gallaher Group | n/a3 | 106% | 64% |
| Imperial Tobacco | n/a3 | 117% | 56% |
| Allied Domecq | 486% | 98% | 64% |
| Daily Mail | 354% | 103% | 69% |
| Smiths Industries | 303% | 114% | 44% |
| Rolls Royce | 256% | 89% | 68% |
| Unilever | 209% | 107% | 64% |
| Centrica | 164% | 87% | 80% |
| BAE Systems | 155% | 93% | 68% |
| Prudential | 110% | 115% | 76% |
| Lloyds TSB | 103% | 105% | 70% |
| Diageo | 97% | 121% | 87% |
| Royal &Sun Alliance | 93% | 96% | 73% |
| BAT | 88% | 87% | 59% |
| Barclays | 76% | 103% | 70% |
| GlaxoSmithKline | 75% | 89% | 87% |
| Smith &Nephew | 73% | 90% | 74% |
| BOC | 71% | 109% | 79% |
| Reed International | 71% | 111% | 63% |
| Capita Group | 63% | 85% | 75% |
| Hanson | 60% | 115% | 68% |
| Associated British Foods | 59% | 127% | 68% |
| Amersham | 58% | 73% | 72% |
| Reckitt Benckiser | 55% | 112% | 58% |
| Cadbury Schweppes | 54% | 108% | 68% |
| Granada Media | 51% | 92% | 100% |
| AstraZeneca | 49% | 80% | 43% |
| Hays | 49% | 101% | 81% |
| Royal Bank of Scotland | 48% | 104% | 63% |
| CGNU | 48% | 106% | 70% |
| Rio Tinto | 48% | 113% | 71% |
| Alliance &Leicester | 44% | 92% | 74% |
| HSBC | 40% | 88% | 77% |
| BAA | 36% | 147% | 83% |
| Pearson | 34% | 92% | 60% |
| Schroders | 33% | 122% | 77% |
| Legal &General | 32% | 109% | 55% |
| Friends Provident | 31% | 137% | 83% |
| BP Amoco | 30% | 110% | 72% |
| Wolseley | 30% | 86% | 50% |
| Abbey National | 27% | 96% | 79% |
| HBOS | 23% | 100% | 85% |
| Six Continents | 20% | 99% | 64% |
| Standard Chartered | 18% | 97% | 27% |
| Anglo American | 15% | 97% | 74% |
| Compass | 14% | 74% | 79% |
| WPP | 13% | 71% | 47% |
| Northern Rock | 12% | 83% | 69% |
| Hilton | 11% | 87% | 82% |
| Celltech | 11% | 82% | 96% |
| Enterprise Oil | 9% | 89% | 76% |
| Old Mutual | 7% | 112% | 41% |
| BG | 7% | 83% | 84% |
| P&O Princess Cruises | 6% | 83% | 28% |
| International Power | 4% | 117% | 54% |
1Size of scheme is taken as the greater of the assets and the liabilities. Size of company is taken to be the net asset value.
2The ratio of the market value of assets to the liabilities disclosed under FRS17.
3Group net assets disclosed as negative at the year-end.
