Amendments to pensions accounting could cost firms £10bn

Proposals to amend accountancy standard IAS19 could cut the earnings of UK firms by as much as £10bn, accountants and actuaries warn.

KPMG says the changes - announced yesterday - would hit UK businesses' earnings by about £10bn and have an impact of over £50m per annum on employers with the largest pension schemes. Pensions partner Mike Smedley (pictured) says: "While the move will no doubt improve transparency, for some companies it will be a blow to reported profits which they may be under pressure to make up for elsewhere. "Companies will also lose the ability to smooth earnings by tweaking the expected return assumptions. This is turn may lead to some rethinking on investment strategy." The warning comes aft...