Two Changes in Accounting Principles of Pension Plans

－British, or American：that is the question－

Abstract

In the last few years, we have witnessed two alterations in financial accounting and reporting rules concerningpension plans. In the United Kingdom, accounting rule FRS 17, which stipulates the immediate recognition of actuarialgains and losses, will come into force in 2005. Meanwhile, in the United States, FAS 132 was amended in 2004 tostipulate the detailed disclosure of financial expectations and results of pension plan operations and management policies.It is probable that one of these two changes will spread to financial reporting in Japan, as IASB has already adopted themin its new rules. The financial impact that the adoption of these two changes could have in Japan is ambiguous, anddepends in large part on investor behavior. Considering the similarity to current accounting standards and the consistencywith their underlying concepts, it is more likely for Japan to introduce a comprehensive disclosure rule for pensionssimilar to FAS 132 in the U.S than the immediate recognition of actuarial gains and losses similar to FRS17 in the U.K.