Posted on
1st November 2004 by
Brian Spence
A rare audit qualification relating to FRS 17, the financial reporting standard on pensions, at the UK subsidiary of the US drugs group Merck, recently raised a few eyebrows within the accountancy and actuarial professions.
In the accounts, the auditor, PwC, qualified its report on the basis that they believed that the company had used an inappropriate discount rate in valuing the pension scheme liabilities. Rather than Merck’s discount rate of 6.0 per cent, PwC suggested that a more appropriate rate would have been in the range of 5.25 to 5.75 per cent. The auditor took the view that, in the absence of an actuarial calculation using a more appropriate discount factor, it was unable to quantify the extent of the understatement of the pension liabilities. Read more »
Posted in: Blog
Tags: Accounting, Actuarial, FRS17, Pensions
Posted on
30th October 2004 by
Brian Spence
The thought of starting up a new actuarial consultancy has probably crossed the minds of quite a few actuaries over the years. However, taking the next step and developing a successful business is the real challenge. New ventures (as compared to an established consultancy) have to have much greater focus on developing new clients. Working with a small team means that all key personnel will inevitably have to take a major role in generating new business. This can be quite alien to many actuaries who have spent their working lives providing services to clients who have been “delivered” to them.
There are many hurdles to overcome and existing acumen needs probably to be enhanced with not only new business skills but also new resources in order to make a success of a new start up. Read more »
Posted in: Blog
Tags: Actuarial, Corporate, Pensions
Posted on
13th September 2004 by
Brian Spence
The words ‘simple’ and ‘pension’ rarely sit well together. Indeed it is the government’s view that it is the level of complexity inherent in buying a pension which prevents people from saving adequately for their retirement.
Whilst there is undoubtedly some truth in this, it is far from the whole story. Pensions just aren’t ‘sexy’ and, at a time when young people in particular have other drains on their finances, such as mortgages, and when many have suffered from poor investment returns, pensions tend to take a back seat. Read more »
Posted in: Blog
Tags: Administration, Legislation, Tax
Posted on
22nd August 2004 by
Brian Spence
Regularly ridiculed by many a wannabe stand-up as socially dysfunctional number-crunchers seeking refuge from all the glamour and glitz that is the world of accountancy, actuaries have found themselves the brunt of many a witticism reflecting their somewhat stuffy reputation for some time now but, in the words of Bob Dylan, ‘the times they are a changin”.
With actuaries now assuming a much more prominent role across a greater number of areas of corporate life than ever before, there’s probably never been a more exciting time to be involved in the profession. Read more »
Posted in: Blog
Tags: Actuarial
Posted on
20th July 2004 by
Brian Spence
Jack Nicholson in ‘A Few Good Men’ famously said of Tom Cruise, ‘you can’t handle the truth’. Nicholson might not have had FRS17 in mind at the time, but his accusation could be made against those many companies, trade unions and pension advisers who clamoured to give voice to their disgruntlement over the recent introduction of accounting standard FRS17 – they detest it because they can’t handle the truth.
FRS17 was borne out of a need to address the predicament created by the then prevalent discounting of pension scheme liabilities, based on the erroneous assumption that equities would continue to deliver a healthy level of return for years ahead. Of course, as we now know, recent years have seen interest rates continue to fall while, simultaneously, the equity market suffered a marked slump. Read more »
Posted in: Blog
Tags: Accounting, Actuarial, Corporate, FRS17
