Birmingham’s accounts show a £994m pension surplus. Then the asset ceiling makes it disappear. But disappearing in the accounts is not the same as disappearing in real life.
As you say in your article: " The accounting rule says, in effect, that even where a pension surplus exists, an employer can only recognise that surplus on its balance sheet if it has an unconditional right to benefit from it, either through a refund or through reduced future contributions. That may be perfectly proper accountancy. It may comply with the rules. It may make technical sense to people who can read pension notes without losing the will to live. But to the public, the effect is extraordinary. A billion-pound surplus appears in the note, then an accounting ceiling descends, and the headline position looks like a liability."
There is, however, still an issue which is to ensure that the calculations are done correctly. It would be sad for a surplus to remain trapped in the funds when in fact it is available for Birmingham to spend.
Hence this does need looking at, but the laws were changed to protect pensioners and those laws cannot simply be ignored.
This is a major issue - looking to do a fresh angle on this next week ...
Ask, ask, ask, until you're blue in the face!
As you say in your article: " The accounting rule says, in effect, that even where a pension surplus exists, an employer can only recognise that surplus on its balance sheet if it has an unconditional right to benefit from it, either through a refund or through reduced future contributions. That may be perfectly proper accountancy. It may comply with the rules. It may make technical sense to people who can read pension notes without losing the will to live. But to the public, the effect is extraordinary. A billion-pound surplus appears in the note, then an accounting ceiling descends, and the headline position looks like a liability."
In other words the employer can only recognise the surplus if they can spend it. We have seen in the past what happens when employers take money out of pension funds that was not available as with Robert Maxwell see report: https://www.theguardian.com/media/greenslade/2011/nov/03/pressandpublishing-daily-mirror
There is, however, still an issue which is to ensure that the calculations are done correctly. It would be sad for a surplus to remain trapped in the funds when in fact it is available for Birmingham to spend.
Hence this does need looking at, but the laws were changed to protect pensioners and those laws cannot simply be ignored.