Mercer welcomed the IASB Discussion Paper on changes to IAS19 but expressed concern over the practicalities of measuring pensioner liabilities.
According to Phil Turner, principal at Mercer, “The introduction of the new "contribution-based promise" category of plans will certainly make the measurement of pension liabilities much more meaningful in countries like Belgium and Switzerland where the approach to pension provision is essentially defined contribution.”
“However, measuring pension liabilities according to how they arose is impractical. In many cases the necessary information will not be available and this approach will give rise to inconsistencies,” commented Phil Turner.
“For example, career average plans would have to account on a more prudent basis than final salary plans. This could have potentially significant repercussions on occupational pension scheme design in the UK and place unnecessary obstacles in the way of employers reducing risk exposure in current pension schemes.”
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