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Have changes in pension accounting changed pension provision?:a review of the evidence

Kiosse, P and Peasnell, K V (2009) Have changes in pension accounting changed pension provision?:a review of the evidence. Accounting and Business Research, 39 (3). pp. 255-267. ISSN 2159-4260

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    Abstract

    The present paper reviews the research evidence on the impact of changes in pension accounting methods on pension provision. We show that decisions to freeze, terminate or convert defined benefit (DB) plans have been driven primarily by a desire to limit contributions, though financial reporting has played a part as well. The introduction of accrual accounting requirements for post‐retirement health care benefits in the US similar in character to those required for DB pension liabilities appear to have motivated some firms to curtail health care provision. Changes in accounting for DB schemes have affected how firms allocate pension plan assets. We conclude that accounting matters, though perhaps not as much as is sometimes claimed. Increased costs of providing DB pensions, coupled with the greater volatility of employers’ cash contributions, have undoubtedly played the major part in the decline of DB schemes.

    Item Type: Article
    Journal or Publication Title: Accounting and Business Research
    Uncontrolled Keywords: pension provision ; accounting standards ; pension regulation ; portfolio asset composition ; post‐retirement health care
    Subjects: UNSPECIFIED
    Departments: Lancaster University Management School > Accounting & Finance
    ID Code: 45269
    Deposited By: ep_importer_pure
    Deposited On: 11 Jul 2011 19:29
    Refereed?: Yes
    Published?: Published
    Last Modified: 30 Apr 2013 16:54
    Identification Number:
    URI: http://eprints.lancs.ac.uk/id/eprint/45269

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