- The replacement of the expected return on assets element of the profit and loss charge by a credit linked to the discount rate used to measure the liabilities. Therefore given that an interest charge already applies to the liabilities, the final result on the P&L account will effectively be an interest charge (credit) on the plan deficit (surplus); and
- Companies which partially recognise actuarial “experience” in the profit and loss account will either need to fully recognise year on year experience or alter the accounting method to recognise experience gains and losses via the Statement of Recognised Gains and Losses (STRGL).
Yesterday, the International Accounting Standards Board (IASB) confirmed the much-trailed changes to accounting for pension benefits in accordance with IAS 19. The changes will be effective for accounting years commencing 1 January 2013, though earlier adoption is encouraged. IAS 19 applies to all UK (and EU) listed Companies, though can be adopted by non-listed companies. The main UK pension accounting standards, FRS 17, is effectively being replaced from 2012, so these changes will generally also affect non-listed companies. The main changes are as follows: