Pension scheme trustees need to look beyond accounting and actuarial information relating to their fund, according to one expert.
Paul Boyle, chief executive of the UK Financial Reporting Council (FRC), explained that examining issues such as cash-flows would give them a better idea about the true direction the scheme is taking.
He said: "Users of accounting and actuarial information relating to pensions need to recognise these limitations. It would be unwise to base a decision solely on this information; it should be one of many inputs to decision-making."
As pensions accounting has to compare the long-term flow of benefits with an existing stock of assets on a theoretical basis, the real outcomes can often be different from these predictions, Mr Boyle explained.
For this reason, trustees should not look at the information as being a fully accurate picture of real world returns.
Recently, the FRC announced that it is looking in to reducing the complexity of corporate reporting and governance.
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