Cantillon: Accounting to a different standard at Siptu
Union has decided not to comply with the requirements of Financial Reporting Standard 17
There are few workers in decent employment these days (including younger public sector workers if they have any sense) who are not worried about what kind of pension they will be entitled to when they reach retirement age.
It’s a tricky, complicated subject, and it raises its head in the latest annual report published by Siptu, the State’s largest public and private sector trade union.
The union’s accountants, O’Connor & Associates, of Harcourt Road, Dublin, in their report accompanying the 2012 accounts say the accounts do not give a true view, under current accounting standards, of the union’s state of affairs as at the end of December of last year.
This is because the union has decided not to comply with the requirements of Financial Reporting Standard 17, which deals with retirement benefits, as it considers the standards to be contrary to the objective of supporting the continued provision of defined benefit pension schemes by employers.
The accountants say the standard provides for the presentation of information regarding the costs of providing the benefits earned by employees during the year, and of the value of the benefits the union has committed itself to providing in respect of service up to the year’s end.
If the union had complied with the standard, the effect would have been to reduce its net assets by €127.1 million, its surplus for the year by €5.6 million, and to debit its total gains and losses for the year by €34.4 million. These are very material amounts, as the accountants point out.
They would have reduced the union’s net assets from €47.4 million, to minus €79.7 million, have changed its €2.8 million surplus for the year into a loss of €2.8 million, and have changed an €1.8 million gain to a €32.6 million loss.
The accounts say the traditional method of funding that has been used for the pension scheme was used for a valuation in January 2010 that showed the pension fund was in deficit to the tune of €103 million. “The union is committed to supporting the continuation of the pension scheme, in conjuction with staff and pension trustees. This commitment extends, at the discretion of the national executive council, to the provision of supplementary funds if required.”
A plan to fix the scheme is being negotiated with the Pensions Board. The accounts say the union does not accept the information required under the rejected accountancy standard reflects the liabilities currently or likely to fall payable by the union in the foreseeable future.