The Financial Reporting Council (FRC) proposed changes to pensions accounting for sponsors of DB schemes that apply UK accounting standards (FRS 102).

The FRC proposes to clarify that where the deficit is reflected on the sponsor’s balance sheet the sponsor does not also have to account for deficit contributions as liabilities. In addition, it proposes that surpluses that are not available for recovery by the sponsor should not create confusion by being reflected in the profit and loss account.

The brief NAPF response supports these clarifying proposals, which should avoid different approaches to accounting, and most importantly avert the danger that deficits are double-counted.

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