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Delay to FRS17 &#39is not reprieve for final salary&#39

MX Financial Solutions is warning that the postponed implementation of accounting standard FRS17 will only ease the pressure on occupational pensions and not remove it.

Full adoption of the controversial accounting rule, which requires companies to include pension liabilities on their balance sheets, has been delayed until 2005.

MX Financial fears this will not stop the closure of defined-benefit pensions as FRS17 has raised awareness of the threat posed by such schemes.

The accounting rule could be superseded by a new worldwide standard to be introduced by the International Accounting Standards Board next year.

MX Financial believes that companies already facing increased business pressures will decide that they can do without the additional risks involved in defined-benefit pensions.

It says poor investment returns in recent years are adding to the pressure on defined-benefit schemes, meaning that companies can no longer take contribution holidays. Many have had to write big cheques to top up their schemes.

MX Financial has produced a guide for companies entitled, Reviewing Your Company Pension, that covers the issues and provides a glossary of pension terminology from the Plain English Campaign.

Head of corporate marketing Jim Aitken says: “Moves towards defined-contribution schemes were already under way before the advent of FRS17. A number of factors converged to accelerate the trend including the Pensions Act, dividend tax credit changes and the minimum funding requirements.”

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