Trustees and administrators of pension schemes are increasingly looking for outsourced accounting support due to pressure to meet financial year end deadlines, annual audit preparation and ensuring statutory accounts are compliant with accounting standards and regulations.

Financial year end concerns

As your pension scheme's next financial year end approaches, the following may be causing you concern.

  • Is there enough resource in my finance team to complete the statutory pension accounts before the audit begins?
  • Am I up to date with the latest pension Statement of Recommended Practice (SORP)?
  • There will be staff absences during the year end process; it would be great to have some ad hoc experienced cover during this time.
  • Does my team have the experience to prepare statutory accounts and to deal with the new disclosure requirements of Financial Reporting Standard 102 (FRS102)?
  • Are there other projects I should be working on that would be a better use of my time?
  • I am aware of FRS102, but I'm not sure if it applies to the pension scheme this year.

UK GAAP change to FRS102

The replacement of current UK Generally Accepted Accounting Practice (UK GAAP) with the new FRS102 represents a major change to the future shape of UK financial reporting. Pension schemes will be affected in several ways.

How will FRS102 affect pension schemes?

The new standard is mandatory for periods commencing on or after 1 January 2015. Early adoption is permitted for periods ending on or after 31 December 2012, where it does not conflict with SORP. The Pension Research Accountants Group is due to issue a consultation in relation to SORP in 2014.

Under FRS102 pension schemes will be considered as financial institutions. They will be required to complete additional disclosure relating to investment risk and actuarial liabilities.

Specific considerations may include the following.

  • Have you considered early adoption?
  • What impact will the new standard have on your statutory pension accounts format?
  • Are your accounting procedures ready for the potential 31 December 2013 transitional balance sheet date?
  • Do the statutory pension accounts correctly include the additional disclosure required by FRS102?

We have taken great care to ensure the accuracy of this publication. However, the publication is written in general terms and you are strongly recommended to seek specific advice before taking any action based on the information it contains. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. © Smith & Williamson Holdings Limited 2013. code: 14/033 exp: 30/06/2014