International Pension Accounting
BRITAIN’S biggest companies face a £40 billion pensions hit this year under new accounting rules that could trigger sharp falls in share prices and force widespread restructuring, new analysis has shown.
FTSE 100 companies with final salary pension schemes have a combined pensions deficit of £50 billion under accounting standards brought in this year. However, less than £10 billion is currently booked in the accounts. There are fears that share prices could be hit when City analysts become aware of the extent of the gap.
David Robbins, a consulting director for Deloitte, said that the full impact of the adjustment could come as a shock to financial analysts. He said: “We were very surprised to find that very little of the pensions deficit is actually in the accounts. Getting from £10 billion to £50 billion in one year is going to be a real jolt.” Changes affecting quoted companies are required under IAS19, the new international accounting standard for pensions. The impact will start to be seen from July.
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