The Accounting Standards Board (ASB) has issued a discussion paper that could lead to important changes to the reporting of a pension scheme’s assets and liabilities.

The ASB hopes that the views set out in this discussion paper will influence the International Accounting Standards Board as it reviews the current IAS 19 requirements.

The conclusion found in the discussion paper are intended to apply to both defined benefit and defined contribution schemes.

The consultation closes on 14 July 2008.

Proposals include:

  • the use of a 'risk-free' discount rate (i.e. the yield on Government bonds) rather than the corporate bond rate; 
  • reporting changes in pension assets and liabilities in the period in which they arise, rather than being spread; and
  • financial statements reflecting the actual return on assets, rather than expected value.

The paper also canvasses opinion as to whether liabilities should continue to include the effect of future increases in salaries or whether this should be changed to reflect the employer’s discretion over salary increases.