MURAL - Maynooth University Research Archive Library

    Valuation of Defined Benefit Pension Schemes in IAS 19 Employee Benefits – True and Fair?

    McNally, Bridget and O'Connor, Thomas and Garvey, Anne M (2019) Valuation of Defined Benefit Pension Schemes in IAS 19 Employee Benefits – True and Fair? Journal of Finance Regulation and Compliance, 27 (1). pp. 31-42. ISSN 1358-1988

    Download (122kB) | Preview

    Share your research

    Twitter Facebook LinkedIn GooglePlus Email more...

    Add this article to your Mendeley library


    Purpose: This paper argues that the accounting standards’ requirement for the valuation of pension scheme liabilities, potentially produces an artificial result which is at odds with the “faithful representation” and “relevance” objectives of these standards. Design/methodology/approach: The approach is a theoretical analysis of the relevant reporting standards with the use of a practical example to demonstrate the impact where trustees adopt a hedged approach to portfolio investment. Findings: Where a pension fund engages in asset liability matching and invests in “risk – free” assets, the term, quantity and duration/maturity of which, is intended to match some or all of its scheme liabilities, the required accounting treatment potentially results in the sponsoring company’s financial statements reporting fluctuating surpluses or deficits each year which are potentially ill-informed and misleading. Originality/value: Pension scheme surpluses or deficits reported in the financial statements of listed companies are potentially very significant numbers, however the dangers posed by theoretical nature of the calculation has largely gone unreported.

    Item Type: Article
    Keywords: Faithful representation; risk free assets; hedging; relevance;
    Academic Unit: Faculty of Social Sciences > Economics, Finance and Accounting
    Item ID: 12805
    Identification Number:
    Depositing User: Thomas O'Connor
    Date Deposited: 22 Apr 2020 11:02
    Journal or Publication Title: Journal of Finance Regulation and Compliance
    Publisher: emerald publishing ltd.
    Refereed: Yes
    Use Licence: This item is available under a Creative Commons Attribution Non Commercial Share Alike Licence (CC BY-NC-SA). Details of this licence are available here

    Repository Staff Only(login required)

    View Item Item control page


    Downloads per month over past year

    Origin of downloads