FRS 17
UK Financial Reporting Standard 17, dealing with retirement benefits.
FRS 17 replaced - and widened the scope of - the earlier UK Statement of Standard Accounting Practice SSAP 24. The most significant impact of FRS 17 is in relation to defined benefit pension schemes.
FRS 17 requires any deficit in the pension scheme to be recognised in full in the sponsoring employer's balance sheet.
FRS 17 also requires pension liabilities to be measured on a more conservative basis for accounting purposes, compared with the earlier accounting under SSAP 24. This generally resulted in significantly greater pension liabilities (for accounting purposes) under FRS 17, and a greater incidence of larger pension deficits for accounting purposes.
FRS 17 requires the movement in the pension deficit (or surplus) to be analysed into a number of specified components.
Some of these components are recognised directly in the income statement, impacting reported accounting profits. These components include the expected returns on the invested pension fund assets.
Other components of the change in the pension deficit (or surplus) are recognised only in the statement of total recognised gains and losses. So these components do not affect reported accounting profits. These components include 'actuarial gains and losses' including differences between the actual returns and the expected returns on the invested pension fund assets.
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