Measuring of pension deficits

Stewart Ritchie, director, Pensions Development Scottish Equitable Sir, Paul Newton's article...

Stewart Ritchie, director, Pensions Development Scottish Equitable Sir, Paul Newton's article about pension deficits (IW 19 May) is helpful and timely, but does it go far enough? The deficits are measured on FRS17, but this discounts the liabilities using AA bond yields. A solvency basis equivalent in strength to a life office guarantee might be closer to a long gilt yield minus half a percent, and would produce deficits of perhaps twice or three times those of FRS17. If the market is going to use the weaker FRS17 measure in valuing a company's shares, it should be very clear why. ...