Accounting
More trouble ahead for final salary schemes |
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| Accounting | |
| Written by Roberta Murray | |
| Monday, 15 June 2009 | |
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New accounting proposals add to defined benefit plan woes.
KPMG has said new accounting proposals are set to add to corporate pension liabilities. And despite this, recent accounting proposals would wipe up to an extra £50 billion from UK company profits and hit balance sheet deficits for a further £20 billion, making it more likely that companies will continue to close gold-plated defined benefit plans or find other ways to reduce the associated cost and risk. Mike Smedley, pensions partner at KPMG in the UK, said: “Recent financial turbulence has led to criticism of IFRS as a measure for the liabilities of company pension plans, mainly due to the significant increase in corporate bond yields pushing down liability measures. However, our survey suggests that companies are currently reserving £30 billion more than raw bond yields suggest and £10 billion for uncertain future mortality improvements.”
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