IAS 19

• International Accounting Standards 19 (IAS 19)
• It requires the pension scheme surplus/deficit should be shown on company balance sheet and pension cost shown in profit and loss account
• Both assets and liabilities will be shown on the balance sheet
• Assets will be down at the market value
• Liabilities will be shown in present value using a discount rate based on market yield of AA corporate bonds which ensures there is an element of consistency between schemes.

Section 143

• When a scheme enters the PPF, a section 143 valuation is needed to know if the scheme assets are sufficient to cover the PPF level of compensation
• The starting point is a theoretical cost of buying scheme benefits with an insurance company, but the value is based on the PPF level of compensation
• The present value of past service liabilities is discounted using gilt yields

Section 179

• Requires scheme to undertake a PPF valuation to establish the level of scheme assets and liabilities.
• Similar to 143 valuation, but the basis used is simpler
• The valuation is used to determine the level of scheme underfunding and thus it can be used to set the risk based PPF levy.