In common with many accounting standards, FRS17 requires the stable door to be locked after the horse has bolted. However in this instance it is probably better late than never because it has at least focussed attention on the level of funding of pension schemes.
It is unfortunate that attempts are being made to blame the standard for the state of affairs which exists when the true culprits are the government and the pension scheme investment advisers and actuaries.
Funding has been seriously damaged by Mr Brown’s stealth tax terminating the funds ability to reclaim tax on dividends which milks the funds of some #5bn a year. This has been exacerbated by the cloud cuckooland policies of the fund managers who expected the FTSE to continue its rise into the stratosphere uninterrupted and resulted in contribution ‘holidays’ for many companies.
Whilst some individuals raised objections to these policies at the time I do not recall the accountancy profession expressing any concerted concern.
It is to be hoped that FRS17 will not be ditched when the current crisis in pension scheme funding ceases to corner the headlines. It will provide a continuing useful gauge of company liabilities (or surpluses) regarding these schemes and also presumably deals with concerns regarding ‘off balance sheet’ matters.
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