UK - The UK's National Association of Pension Funds (NAPF) is launching a major project this year to try and find a better solution to pensions accounting, as there is growing concern about the impact of UK and international pensions accounting rules on defined benefit pension plans.

Early details of the pensions accounting project were revealed yesterday during a meeting in London about the future of the Local Government Pension Scheme (LGPS), where Joanne Segars, chief executive of the NAPF, attended as a speaker.

As part of yesterday's discussions, Segars said the NAPF is about to launch a year-long project to try and create an alternative pensions accounting system to rules currently applied by the UK Accounting Standards Board (ASB) and to the International Accounting Standards Board's (IASB) current proposed reforms.

She said the project will be launched next month at the NAPF Investment Conference in Edinburgh, in a bid to replace the ASB's FRS17 accounting procedures - launched 10 years ago - with one more suited to the needs of UK pension funds.

Stephen Cooper, a member of the International Accounting Standards Board (IASB) will be involved in a discussion with Lindsay Tomlinson, chairman of the NAPF, and Stephen Haddrill, of the Financial Reporting Council (FRC) at that conference, about the proposed reforms to IAS19 and other elements of data relating to corporate post-retirement provision.

Joanne Segars, chief executive of the NAPF, yesterday argued the pensions organisation has evidence to suggest there is a correlation between the introduction of FRS17 by the ASB and the reduction of access to defined benefit pension provision over the last 10 years.

"We have called on the ASB to have a more realistic focus as we know that drives companies with DB schemes," said Segars.

"There is no doubt that FRS17 continues to have a very damaging effect on pension provision in the UK. We see a correlation of falling scheme membership and the introduction of FRS17. And our members are telling us it is driving away private sector scheme members. As investors we want transparency, but we have to make sure it is the right accounting standards," she added.

While the NAPF has taken up the mantle to tackle pensions accounting, there could be a growing body of voices about pensions accounting this year, as Anthony Mayer, chairman of the London Pension Fund Authority (LPFA), followed Segars' comments by stating the pensions industry needs to become more active about tackling the impact of pensions accounting.

"I think we have got to start getting more aggressive about the baleful consequences of FRS17," said Mayer.

"This traffic accident is why so many private sector pensions schemes have closed. We have got to start work with accountancy experts to see whether we can explore a more realistic standard for pensions. If we can make more of cash flow and get out of the clutches of FRS17, we would find life is easier than it is," he argued.

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com

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