UK FRC issues amendments on pension obligations

In an effort to clarify accounting procedures for defined benefit pension plans by UK and Irish entities, the UK Financial Reporting Council (FRC) has issued Amendments to FRS 102 – Pension Obligations.

FRS 102, The Financial Reporting Standard Applicable in the UK and Republic of Ireland, was published in March 2013 and was designed to provide succinct accounting and reporting requirements for unlisted entities. Following its publication, the regulator received queries as to how entities applying the standard should account for a “schedule of contributions” payable to a defined benefit pension plan.

The resulting amendments, which were consulted on in 2014, provide the following clarifications:

  • No additional liability need be recognised for a “schedule of contributions” that has been agreed in order to address a plan deficit when the deficit itself has already been recognised.
  • The effect of not recognising an irrecoverable surplus in a defined benefit plan is shown in other comprehensive income, rather than profit or loss.

Both FRS 102 and these amendments come into effect for reporting periods beginning on or after January 1st 2015. The amendments mean that sponsoring employers reporting under UK and Irish GAAP may continue with current accounting practice for defined benefit pension plans.

Samantha White ( is a CGMA Magazine senior editor.