NEW PENSIONS GUIDANCE PUBLISHED

The Chartered Institute of Public Finance and Accountancy (CIPFA) has published new guidance for local authorities to implement the Financial Reporting Standard (FRS) 17 Retirement Benefits. The proposals represent a significant step towards convergence between local authority and central government accounts.

Outlined in an Update Bulletin to The Code of Practice on Local Authority Accounting in the United Kingdom, recognised by the Accounting Standards Board as a Statement of Recommended Practice (SORP), the proposals will make the costs of local authority pensions transparent. They will also give policy makers the information on which to take decisions about the funding of local authorities including any pensions liabilities.

The Update Bulletin applies FRS 17 to local authorities' pension liabilities in respect of the Local Government Pension Scheme, and police and fire fighters' pensions. It requires all local authorities to disclose their pensions assets and liabilities with their balance sheets for 2001/02.

The Bulletin also sets out in advance the disclosures required for the 2002/03 financial year. A position paper issued by CIPFA in October 2001 expressed a commitment to adopt FRS 17 in full for the 2003/04 financial year, in line with the timetable in the standard.

Commenting on the Bulletin Vernon Soare, policy & technical director, CIPFA said:

'CIPFA is committed to the full implementation of Financial Reporting Standards in local government. The joint committee's proposals will ensure that FRS 17 is fully implemented in local authority accounts, in line with the timetable in the standard. This represents a further step in applying Financial Reporting Standards to local authorities.'

Responding to the publication of the Update Bulletin Mary Keegan, chairman of the Accounting Standards Board commented:

'I am delighted that this Update Bulletin has now addressed how local authorities will implement FRS 17 in the same timetable as the private sector.'

Notes

1. The SORP Update Bulletin was prepared by the Joint Committee of CIPFA and the Local Authorities (Scotland) Accounts Advisory Committee (LASAAC). The CIPFA/LASAAC Joint Committee is recognised by the Accounting Standards Board as the SORP preparer for local government. The joint committee's role is to ensure transparency and good accounting for local taxpayers money within the framework of local government finance law and professional standards. The joint committee consists of senior accountants and auditors practising in local government and the wider profession, with observers from the DTLR and the treasury.

2. The local government pension scheme is a defined benefit scheme funded by employers' and employees' contributions. It is administered locally (by county councils and other large authorities) under statute and specific legislation. The police and fire fighters' pension schemes are contributory unfunded defined benefit schemes administered by individual police and fire authorities under specific legislation. The teachers schemes are contributory unfunded multi-employer defined benefit schemes, administered by the Teachers Pensions Agency and the Scottish Executive.

3. The SORP Update Bulletin is available from CIPFA's Policy and Technical Directorate or CIPFA's website .