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Deloitte comment letter on the new draft SORP for financial reports of pension schemes

Published on: 17 Jul 2014

We have published our comment letter on the Pension Research Accountants Group (PRAG) and its SORP Working Party Exposure Draft (ED) setting out revised proposals for financial reporting by pension schemes in the UK. Overall the SORP provides some useful guidance, however we have some concerns in relation to some of the proposals in the ED.

The ED sets out proposals for accounting and reporting by pension schemes in the context of the new accounting framework introduced by Financial Reporting Standard (FRS) 102 applicable in the UK and Republic of Ireland for financial years beginning on or after 1 January 2015.  The ED also updates the 2007 SORP to include the requirements of new regulations and changes in the pension industry since the 2007 SORP.  

Our key concerns are that:  

  • the requirements for some of the additional disclosures and measurement information specified in the ED may add significant cost in terms of obtaining information, preparing disclosures and engaging actuaries, investment managers and auditors as necessary, particularly for smaller pension schemes; and
  • the costs of the additional complexity and length of pension scheme accounts resulting from these proposals will outweigh the benefits to the key stakeholders (the members of the scheme) in areas such as requiring actuaries to value annuities and the requirement for much more detailed investment risk disclosures.

Further comments and a full response to all questions raised in the invitation to comment are contained within the full comment letter which can be downloaded below.

Download

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