Narrative Reporting in Public Sector Pension Schemes

One of the recurring themes in the current debate about the future of public sector pension schemes is the extent to which the costs, liabilities and funding mechanics of these schemes are transparent and accessible to the wider world.

Given the debate over what is the most appropriate way to value the public sector pension liabilities (and by extension the annual cost of providing those pensions), stakeholders and commentators have sought to better understand the pensions issue but have complained of the lack of information available with which to do this. This has created a vacuum within which poorly informed comment has been allowed to take hold.

In this regard, narrative reporting can help to expand upon the disclosures in the statutory financial statements, particularly concerning how scheme liabilities are calculated, how public sector pension costs are reported in government accounts and what this means for the public sector finances.

In this report, CIPFA looks at the extent to which narrative reporting in public sector pension schemes helps to expand on the statutory financial reporting requirements by comparing and contrasting current narrative reporting practice and requirements across all of the main public sector pension schemes; highlighting areas where practices vary; underlining elements of good practice; and offering some thoughts on how public sector pensions narrative reporting might develop in the future.