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

•  Home 
•  About LCP 
•  Our Services 
•  LCP Europe 
•  Information Centre 
•  Careers 

Accounting for Pensions Survey 2002
Summary

The FTSE 100 companies with defined benefit pension schemes employ between them over 4 million people in the UK. In the middle of July 2002, we estimate the aggregate deficit in these schemes under FRS17 is around £25 billion on a corresponding asset base of just under £200 billion. However, as little as a year ago there would have been an aggregate surplus in these schemes, so we discuss in this survey whether such a statistic has any relevance in the long-term business of pension provision. Lane Clark & Peacock’s 2002 publication of “Accounting for Pensions” is the authoritative survey of practice under SSAP24, the standard that currently regulates accounting and disclosure of pensions information in UK company accounts, and also provides insight into its potential replacement, FRS17. Our previous surveys have focused on the level of disclosure amongst FTSE 100 companies. Under SSAP24, disclosure standards have been variable to say the least and we provide our 2002 league table of disclosure scores in Appendix 1. FRS17 is more prescriptive and compliance with its disclosure requirements is high. The new information gives us an exciting opportunity to assess the exposure to pension scheme risks of the UK’s largest companies. Also of great interest, despite the greater prescription, is the variation that still exists in the assumptions used by different companies. These issues are discussed in Section 6 of this report. The full introduction of FRS17 looks set to be delayed or possibly never implemented. We comment in Section 3 upon the harmonisation of European accounting standards in 2005 and await the outcome with interest. The pressure on defined benefit pension schemes continues. How much longer companies will put up with spiralling costs amid plummeting markets remains to be seen. We comment in Section 4 on the future of private sector defined benefit schemes in the UK.