Nearly half of employers believe proposed International Accounting Standards Board rule changes in how retirement benefits are accounted for in financial statements would discourage them from offering defined benefit plans, according to a Watson Wyatt Worldwide survey released today.
Though most executives of companies surveyed believe the proposed changes would not weaken their commitment to pension and retiree medical plans, 46% of respondents said the proposed changes to cost recognition would discourage them from offering defined benefit plans, while 24% believe the measurement of contribution-based plans would also deter them from offering the plans, an 11-page report about the survey said.
If implemented, the proposed changes could mean higher assessments of liabilities and increased volatility in employer financial statements, John Steele, a senior retirement consultant at Watson Wyatt, said in the statement. The more companies engage the IASB in a dialogue, the better. Providing early feedback could help influence the development of standards that might be adopted down the road.
The proposed rules could have a significant impact on U.S. corporate financial statements following the SEC vote last week to recommend U.S. companies move toward international accounting standards, said a Watson Wyatt statement on the survey.
Among other results, 82% favor improved requirements for the measurement of cash balance, career average pay and notional defined contribution plans, whose treatment under IASB standards is unclear, the report said.
Watson Wyatt surveyed 131 finance and employee benefit directors in 17 countries.
Only 20% of employers describe themselves as extremely or very familiar with the proposed changes, while more than 40% are slightly or not at all familiar, the report said. Just 10% of European and U.K. companies are completely unfamiliar with the preliminary views paper, compared with 34% of U.S. respondents and 44% of participants from other regions.