The Sorp Revision: Pensions

By finance expert Don Bawtree

Don Bawtree
Don Bawtree

A separate module in the proposed Sorp deals with pension accounting, but the basic requirements are unchanged for charities operating defined-contribution schemes. However, the cost is allocated across expenditure headings that might be changed as you adopt the new Sorp.

More important is the new requirement to account for those multi-employer defined-benefit schemes where the charity has not put the deficit, or surplus, into its accounts because it cannot identify its own share of assets and liabilities. There are two important changes here.

First, FRS 102 says the deficit must be shown somewhere in one of the employing entities. This might affect charities in a federation structure.

Second, there is the new requirement to book a liability where there is an agreement to fund any deficit relating to past service. This will be allocated to expenditure headings, so any changes here will add volatility above the line. It will also add a liability to many charities' balance sheets that will make many appear insolvent. This will require clear explanation in the annual report.


Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Already registered?
Sign in
RSS Feed

Third Sector Insight

Sponsored webcasts, surveys and expert reports from Third Sector partners

Third Sector Logo

Get our bulletins. Read more articles. Join a growing community of Third Sector professionals

Register now