New accounting standards may be coming to account for the range of "hybrid" pension plans.
News that the International Accounting Standards Board is planning to research hybrid plans and how best to account for them came in a recent speech at a pensions conference made by Hans Hoogervorst, chair of IASB.
In his speech, Hoogervorst said that the migration of many firms away from DB to DC plans and particularly to some "hybrid" mix of the two has made it difficult under present accounting rules to evaluate funding levels and to depict how risk is shared.
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Hybrid schemes "may be more affordable to companies," he said, but present a challenge to existing accounting rules.
The board's IAS 19 is more of a "binary" approach, he said, better engineered to evaluate either DB or DC plans.
But it "struggles to deal with this new, infinitely variable pension landscape" made up of plans "with differing degrees and forms of risk-sharing."
As a result, IASB has set out "to develop an approach to pension accounting that works for all types of schemes."
The research is expected to take several years, Hoogervorst said.
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