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Financial Reporting of Pensions

This page was last reviewed in December 2011.

The Accounting Standards Board (ASB) completed its research project into the Financial Reporting of Pensions and issued its final report ‘The Financial Reporting of Pensions: Feedback and Redeliberations’ in November 2009. The objective was to provide the International Accounting Standards Board (IASB) with recommendations on matters it might consider in developing a future financial reporting standard on pensions.

The report was a follow-up to the January 2008 Discussion Paper (DP) ‘The Financial Reporting of Pensions’. It sets out the ASB’s redeliberations and recommendations following the comments received during the consultation process. A total of 103 responses were received to the DP and the ASB spent considerable time in reviewing the issues raised.

The report was published under the Pro-active Accounting Activities in Europe (PAAinE) initiative by the ASB, the European Financial Reporting Advisory Group (EFRAG), the Accounting Standards Committee of Germany (ASCG) and the French Conseil National de la Comptabilité (CNC). The recommendations were, however, only those of the ASB. The other bodies consider the report a useful contribution to the debate on the financial reporting of pensions, but do not express a view as to the recommendations.

The report, in the main, affirmed the views set out in the DP, acknowledging that a number of them cover difficult issues and are controversial. In particular, on the measurement of liabilities, it affirmed the view that the discount rate used should reflect the time value of money, and therefore should be a risk-free rate. The ASB reiterated that it is not possible to make a reliable estimate of the risk arising from the size and variability of the liability to pay pension benefits. In its view, users of financial statements are better served by disclosures regarding the risk than through adjustment of the underlying liability.

Discussion Paper: The Financial Reporting of Pensions (January 2008) (PDF)

The Financial Reporting of Pensions: Feedback and Redeliberations Report (November 2009) (PDF)

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