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Pensions costs can have a huge impact on your annual accounts.
Our experts can help you to use the accounting standards’ (be they IAS 19, FRS 17 or FAS 132) flexibility to report your pension liabilities in the way that best suits your circumstances.
We can help you to plan and budget for the future. This can include modelling the accounting impact of a variety of pensions events, including:
Investment strategy updates
Accounting standards updates
Liability management exercises (for example: buy-in, buy-out, transfer value exercise or pension increase exchange)
Our experts can offer advice on a range of acceptable assumptions, the headline figures’ sensitivity to changes and how to benchmark against other companies.
We can adapt our delivery deadlines to meet your required timescales.
Full, detailed reports of your processes and decisions will help you to develop a deeper understanding of the accounting disclosures. It will also provide a full audit trail to answer any questions from the auditors.
Our experts have years of experience on both sides of the table - working on major accounting firms’ audit teams, as well as presenting corporate accounts to auditors. As such, we are ideally placed to negotiate any proposed assumptions with your auditors.
All 3 accounting standards (IAS 19, FRS 17 or FAS 132) require pension costs to be calculated by reference to corporate bond yields. However, it’s important to appreciate that -1% in yield is equivalent to +20% pension costs for the typical corporate pension scheme.
This means that the bond yield that you choose as a reference point will have a huge impact on your calculated pension costs. This chart (see below) shows the wide disparity in bond yields that you could choose as a reference point.
We’ve discovered that several major audit firms are setting relatively low yield base points (leading to increased projected pension costs).
Our experts have successfully negotiated higher yield base points, leading to significant reductions in balance sheet deficits and profit / loss charges.