Pensions - Articles - AA respond to GMB call for TPR to investigate trustees

 The current size of the IAS 19 accounting deficit has more to do with the drop in the value of gilts and bonds post Brexit than anything the trustees could or couldn’t do. 

  

 As at 31 July 2016, the net liabilities of the defined benefit pension schemes under IAS 19 were £622m. This large increase since 31 January 2016 was principally due to the decrease in corporate bond yields, which we are required to use as the discount rate for these liabilities. Up from £296m in June to £622m in July.

  

 Corporate bond yields have fallen significantly following the recent UK vote to leave the European Union and the announcement by the Bank of England in July 2016 that it would cut interest rates and undertake a UK corporate debt purchase programme.

  

 The triennial review valuation for this scheme is being carried out as at 31 March 2016. Preliminary indications suggest the reduction in long term gilt yields since 2013 will cause the deficit to increase from £202m as at 31 March 2013. However, we expect the deficit to be materially below the IAS 19 equivalent. The final results of the triennial review will not be known for up to fifteen months after the 31 March 2016

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 In light of the anticipated increase in cost of the AA pension scheme, we are undertaking a review of the options for mitigating current and future liabilities.

  

 When we have anything further to say our staff will be the first to hear.”