Stakeholders with links to the pensions industry have been invited to comment on amendments to a draft update of the sector’s Statement of Recommended Practice (SORP).

Issued on 24 June, the invitation comes from the Pensions Research Accountants Group (PRAG), which the Financial Reporting Council (FRC) officially recognises as the sector’s SORP-making body.

As PRAG explained in an accompanying statement, the industry’s SORP, known as Financial Reports of Pension Schemes, was last reviewed and updated in 2018. Since then, the FRC has made a number of amendments to Financial Reporting Standard 102: the principal accounting ruleset that applies to pension schemes in the UK and Republic of Ireland.

In addition, PRAG points out, a number of industry developments have occurred since the 2018 review that have an impact on pension schemes – for example, in scheme investment strategies – as well as a series of other legislative and regulatory changes.

Best practices

In a preface to the revised document, PRAG notes that under the FRC’s Policy on Developing SORPs, published last November, SORP-making bodies are required to monitor and update the SORPs for which they are responsible on a regular basis.

PRAG explains that it consulted extensively across stakeholder groups on any proposed changes to the SORP and received a number of suggestions for amendments, additional clarifications and illustrative examples.

Where considered appropriate, it has incorporated those ideas into the update.

In developing the revised draft, PRAG was mindful of the FRC’s objective for SORPs to recommend particular accounting treatments and disclosures, with the aim of narrowing areas of difference and variety between comparable entities.

As such, the revised SORP has sought not to extend the relevant reporting and disclosure requirements beyond those required by FRS 102 or other, existing best practices – except where it was considered appropriate and proportionate to do so.

Questions in the consultation cover three areas: fair value, investment risk disclosures and sole-investor pooled arrangements. To enable stakeholders to follow how the revisions have evolved, the draft SORP is presented with track changes intact.

Full details

PRAG SORP Working Party Chair Andy Lowe says: “We thank all parties, including the FRC, for their engagement in the process of updating the SORP.

“We are committed to developing the SORP based on evidence from consultation with all stakeholders, including users, preparers and others, and very much welcome comments on the draft SORP.”

For full details of the consultation, including the questions and a window for uploading feedback documents, click here.

Follow this link to access the revised SORP.

To provide all interested parties with an opportunity to hear, first-hand, further information about the proposed amendments to the draft SORP, PRAG is planning to host a special webinar on Friday 18 July at 10am. Lowe is set to host the event.

Register for the webinar here. 

Further reading

ICAEW has provided some background information about the pensions SORP here.