PwC UK Study Shows Pension Disclosures Affect Investors’ Perception

Lucas Gilmore, “Big 4″ observer
November 17, 2010 /

A recent study conducted by PwC UK revealed how the manner by which companies disclose their pension obligations influences negatively the perception of investors on the business.

The PwC survey respondents included Finance Directors (FDs) in 108 larger firms and 17 of the FTSE 100 and 28 with over 10,000 employees. The end result showed that 56% of FDs observed how their investors’ perception toward their business has been negatively impacted by their pension disclosures.

Another concern that the survey has found out was the level of cash funding agreed with pension trustees which about 25 percent of FDs believed has largely influenced how their investors perceived the business. Only 9% of the FDs believed that investors and credit raters would give priority to information under IAS 19.

The period during which the report of PwC came out is said to be critical, driving the Accounting Standards Board to rule changes in the regulation of pensions accounting to address this issue. The IASB has been reported to mull over restricting several companies from taking credit in their P&L for investment performance that is anticipated in return-seeking pension assets.

Brian Peters, a pensions partner at PwC, said changes in the pensions accounting may only have little impact on how FDs view the influence of pensions to the business as analysts dismiss the notion that reviewing company accounts will bring about investment gains.

The PwC survey further showed that only 18 percent of FDs believe the actual return on assets should be disclosed, preferring instead the present regulations in anticipating the performance of investment.

 

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