Global pension risk – How do Swiss multinationals compare to their peers

Bild_Pension_BlogLower long-term interest rates look here to stay. People are living longer. Finding positive real investment returns with an acceptable level of risk is getting tougher. All of these factors are putting pressure on the costs of retirement.

Our 2014 survey of corporate attitudes about global retirement provision showed the global trend towards defined contribution pension plans which place the risk of financing retirement on employees. While this trend continues, the legacy of past promises made by corporates remains.

Our analysis of the latest financial disclosures of 587 companies across Europe shows the continuing and growing impact retirement obligations have on balance sheets and corporate results. Our study looked at companies with market capitalisations over €1bn, including 71 Swiss corporates. This showed that:

  • The 71 Swiss multinationals in our analysis had total defined benefit obligations of €204bn.
  • These obligations were on average 16% of market capitalisation (value of shares in circulation).
  • Assets to cover 85% of these obligations, a fall of 5% compared to 2013/14.
  • Annual payments by Swiss companies to defined benefit plans were of 2.4% of the obligations (i.e. €4.9bn), equivalent to 0.3% of shareholder value a year.

You can find our full analysis here.

Solving these challenges needs a clear global strategy combined with local actions and plans to execute risk reduction. Our 2014 survey outlines some of the options and approaches available to multinationals: http://www.pwc.com/gx/en/services/people-organisation/publications/global-pensions-survey.html

 

News on IFRS: November 2015

Our latest IFRS news provides perspectives on foreign currency and advance consideration,uncertainty over income tax treatments and application of materiality to financial statements

Interpretation proposed on foreign currency for advance consideration

The IFRS Interpretations Committee published an exposure draft (ED) for a new interpretation on determination of the foreign currency exchange rate to translate non-monetary prepayments and deferred income liabilities. Derek Carmichael from Accounting Consulting Services provides an overview of the ED.

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New interpretation proposed on uncertainty over income tax treatments

The IC has observed diversity in practice in the recognition and measurement of a tax liability or asset in circumstances where there is uncertainty in the application of the tax law, and is thus proposing to issue specific guidance.

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Proposed practice statement on application of materiality to financial statements

The IASB has issued an ED of a Practice Statement on the application of materiality as part of its ongoing Disclosure Initiative project. The ED does not, however, address the definition of materiality, since this will be addressed in the Principles of Disclosure Discussion Paper.

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Cannon Street Press

  • Leases
  • Update on IFRS 9 Impairment Transition Group
  • Financial Instruments with the Characteristics of Equity
  • Disclosure Initiative
  • IFRS 9 effective date for insurers and the new insurance contracts standard
  • Borrowing costs on completed qualifying assets
  • Joint control

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IFRS Rejections in short – IAS 10

IAS 10 provides guidance for whether or not, and how, an event occurring after the reporting date (but prior to authorisation of the financial statements for issue) needs to be reflected in the financial statements.

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In brief – A look at current financial reporting issues

IFRS in brief

  • IFRIC 21 Levies – Recognition of the debit
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  • IASB issues amendment on one-year deferral of
    IFRS 15

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News on IFRS: September 2015

Our latest IFRS news provides perspectives on impairment, IFRS research and negative interest rates.

Impairment through the eyes of regulators

The first half of 2015 has been marked by increased volatility in global markets. This economic environment could lead to revised budgets and forecasts with an expectation of lower cash flows from existing non-financial assets. With the amount of headroom diminishing, regulators have put impairment at the top of their agendas. So, what do they focus on? This article is based on a review of the 2014 ESMA enforcement decisions in relation to IAS 36.

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IFRS research is separating the facts from the hype

Are IFRS financial statements truly comparable? Are entities considering the appropriate qualitative characteristics when making changes to accounting policies? Has the IASB driven the extensive use of fair value?

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Negative interest rates, not just for banks!

A prolonged period of very low interest rates has highlighted some interesting (and unique) accounting issues. These issues don’t just impact banks, all borrowers and lenders could be impacted and the IC is currently looking at several of the issues.

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Cannon Street Press

  • Request for views on work plan
  • Research projects
  • Standard setting projects
  • Maintenance and implementation projects
  • Next steps

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IFRS rejections in short – IAS 7

The saying goes that ‘cash is king’.Users of financial statements stay true to this saying and continue to focus on the ability of an entity to generate cash as well as how it has used that cash. The cash flow statement is the tool designed by standard setters to communicate this information, splitting cash flows into operating, investing and financing activities.

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In brief – A look at current financial reporting issues

IFRS in brief

News on IFRS: July/August 2015

Our latest IFRS news contains some information about revenue recognition, pension accounting requirements and revenue recognition.

IASB proposes clarifications to IFRS 15

The IASB has proposed amendments to IFRS 15 in some of the areas discussed by the TRG. These areas include accounting for licences, principal versus agent guidance and practical expedients on transition. The proposed amendments differ from those suggested by the FASB. Sallie Deysel from Accounting Consulting Services brings us up to speed on the ED.
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IASB issues ED on pensions

Richard Davis from Accounting Consulting Services brings us up to speed on the new Exposure Draft proposing amendments to IAS 19 and IFRIC 14.
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Revenue TRG weighs in again on IFRS 15 implementation issues

The Revenue Transition Resource group (TRG) continues to debate implementation issues related to the new revenue standard.
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Cannon Street Press

  • Insurance and IFRS 9
  • IFRS Implementation Issues
  • Fair value Measurement
  • IFRS 3 post implementation review
  • Financial Instruments with characteristics of equity

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IFRS rejections in short – IAS 2

Yelena Belokovylenko of Accounting Consulting Services examines the practical implications of IFRIC rejections related to IAS 2.
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Are you interested in more regular updates?

In brief – A look at current financial reporting issues

IFRS in brief

  • Consequences of the Greek financial crisis
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  • Accounting for priority review vouchers (pharma industry)
    Read more…

The audit committee

A practical guide for audit committee members on the requirements and responsibilities of the audit committee.

In this publication, we summarise the current legal, regulatory and de facto provisions as well as the daily routine of the audit committee. In the process, we shine a light on a variety of aspects concerning the audit committee in all of the economic sectors relevant to Switzerland, from industrial undertakings to financial institutions.

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The audit committee

Alternative asset management 2020: Fast forward to centre stage

pwc_alternative_asset_management_2020_e_148x209Over the past several years, rapid developments in the global economic environment have pushed asset management to the forefront of social and economic change. An important part of this change – the need for increased and sustainable long-term investment returns – has propelled the alternative asset classes to centre stage. To help alternative asset managers plan for the future, we have considered the likely changes in the alternative asset management industry landscape over the coming years and identified six key business imperatives for alternative asset managers. We have then examined how managers can implement and prosper from each of these six imperatives.

Download the full report here.

If you have any further questions please contact me.

News on IFRS: June 2015

Our latest IFRS news contains some information about conceptual framework, segment disclosures, and IFRS 9 financial instruments.

IASB exposes revised Conceptual Framework

The IASB issued its exposure draft on the conceptual framework. Maria Constantinou looks at this key proposal and potential impact on standard setting.
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Segment disclosures to bring more insight on the ‘management view’

Derek Carmichael, Global Accounting Consulting services looks at the changes proposed by the IASB in response to the Post Implementation Review (PIR) of IFRS 8 to increase value to users.
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EFRAG endorses IFRS 9 but recommends close monitoring

European financial reporting group says assessment of IFRS 9 is qualitative, not quantitative, but urges implementation without delay.
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Cannon Street Press

  • Clarification to IFRS 15
  • Disclosure Initative
  • FICE research project

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NIFRICS by the numbers; IFRS rejections in brief starting with IAS 1

Ernesto Mendez of Global Accounting Consulting Services examines the practical implications of IFRIC rejections related to
IAS 1.
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Are you interested in more regular updates?

In brief – A look at current financial reporting issues

IFRS in brief

 

News on IFRS: May 2015

Our latest IFRS news contains some information about revenue recognition and employee benefits.

IASB proposes deferral and continues to look at clarifications

The IASB has proposed moving the effective date of IFRS 15 back by one year to 1 January 2018. An exposure draft on the effective date is expected in May 2015 followed by an exposure draft on other clarifications in Q3 2015.
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Employee benefits back in the spotlight

Richard Davis from Accounting Consulting Services brings us up to speed on renewed attention at the IASB on employee benefits.
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Cannon Street Press

  • Disclosure initiative
  • Annual improvements 2014-2016
  • Fair value of quoted investment

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Know your IFRS ‘ABC’: Z is for Zoos… not in the scope of IAS 41, but what is?

Ruth Preedy from PwC’s Accounting Consulting Services examines the scope of IAS 41, a standard that even the most experienced accounting experts don’t know much about.
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Are you interested in more regular updates?

In brief – A look at current financial reporting issues

IFRS in brief

 

News on IFRS: April 2015

Our latest IFRS news contains some information about revenue recognition, leasing and IFRS 15 implementation issues.

Boards propose changes for revenue; FASB delays effective date one year

The IASB and FASB continued to discuss implementation issues related to the new revenue standard in March. The FASB met separately to delay mandatory effective date for US GAAP by one year to 2018 with early adoption permitted in 2017.
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Balance sheets to swell as new lease proposal ready for ballot

Jessica Taurae, Partner in Accounting Consulting Services, looks at the status of the IASB’s long running project on leasing.
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Revenue TRG continues debate

The Revenue Transition Resource Group (TRG) met for the fourth time in March to discuss implementation issues related to the new revenue standard.
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Cannon Street Press

  • IC discussion of IFRS 11
  • Leasing project
  • Disclosure initiative
  • Conceptual framework

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Know your IFRS ‘ABC’: Y is for Yields on government bonds and other discount rate issues

Frances White from PwC’s Accounting Consulting Services in Australia takes a look at discount rates for provisions and impairment, and the effect of an uncertain economic climate.
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Are you interested in more regular updates?

In brief – A look at current financial reporting issues

IFRS in brief