Out of sight

A revised IAS 19 offers firms the opportunity to come clean on pension liabilities. Most won’t take it.

When the IASB wrote IAS 19, Employee Benefits, in 1998, it had planned to require companies to recognise immediately any swings in the value of their pension plans. However, it backed down just before publication, and decided to allow—for the time being—deferral of actuarial gains and losses within a certain “corridor,” with amortisation of gains and losses outside that margin. Ever since, critics have campaigned for a standardised, immediate recognition model. As Graeme Pitkelthy, group chief accountant of Unilever, the Anglo-Dutch consumer goods giant, asserts: “The value of pension assets and liabilities is relevant information for shareholders that should be reflected in full to give a proper understanding of [a company’s] financial position.”

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