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11.02.2013

Charity pension scheme accounting

There is likely to be a change in the way that charities disclose their defined benefit pension liability in their accounts when they are part of a multi-employer scheme.  The change will require charities to disclose their agreement to fund the pension deficit in the multi-employer scheme as a liability on the their balance sheets, and not just as a note in their accounts.  This could well turn a balance sheet with net assets to one that shows it is technically insolvent.  The change is believed  to have been prompted by a charity which refused the advice of its auditors to show the pension liability on its balance sheet.  The Charity Commission would not take a public position on whether the charity or the auditor was right.

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