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The Actuary The magazine of the Institute & Faculty of Actuaries

Discontinuing reality

I have always wondered why those accountants and those actuaries who believe that FRS17 provides a meaningful number are so keen on it. As David Linnell has explained, FRS17 may provide a suitable measure for valuing a pension scheme on a discontinuance basis. But why, when company accounts are prepared and audited on a going-concern basis, are only the company’s pension schemes singled out for discontinuance? Why should any pension scheme be valued on a discontinuance basis unless there is the intention that it should be discontinued and not merely closed to new members? And why does FRS17 prescribe conflicting bases for valuing the assets and for valuing the liabilities?