HR Finance Alert

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The economic crisis is shining a bright light on pension accounting, just as the U.S. Securities and Exchange Commission has voted to move U.S. companies toward adopting international accounting standards. Further complicating matters, the International Accounting Standards Board (IASB) is considering changes to its pension accounting rules, making it difficult to assess the impact of moving to international standards.

In Watson Wyatt’s survey of 131 finance and employee benefit directors across 17 countries, most respondents said changes to pension accounting standards are needed but did not support the IASB’s specific proposals. For example, more than half (56 percent) thought options to defer the recognition of plan gains and losses should be removed, but 80 percent were not in favor of the IASB’s suggestion to recognize all plan experience immediately in the profit and loss account. Moreover, a sizeable minority (46 percent) said the proposed changes to cost recognition would discourage them from offering defined benefit plans in the future.