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Eu rule could keep db schemes open

Companies with final-salary pension schemes in deficit could keep them open due to a new European Union accountancy standard.

Firm with deficits will have to divulge the entire liabilities on their balance sheets. The rule, International Accounting Standard 19, replaces FRS17 for accounting periods.

By keeping schemes open, companies can spread the cost of covering deficits over several years.

First Actuarial director Alan Smith says: “The root cause of the problem is that IAS19 allows certain losses to go unrecognised and for other losses to be spread, resulting in a balance sheet that does not necessarily reflect the true nature of a company’s pension liabilities.

“The silver lining to this cloud, for members at least, is some schemes may remain open to delay the day when the balance sheet has to reflect the full pension deficit.”

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