Speaking at the Association of Corporate Treasurers Pensions Conference, Boyle said discounting future cash-flows could create a potentially misleading impression.
He noted that a draft new Actuarial Standard issued for consultation by the Board for Actuarial Standards would require actuaries to give greater prominence to the timing and nature of cash-flows on which their reports are based and to the likely results of similar future reports.
Boyle said: “The pensions accounting challenge is how to compare a long-term flow of benefits with a current stock of assets. We can use discounting to convert the long-term flow into a present value, which dramatically shrinks the reported value of liabilities.
“However, discounting is a practical technique with a theoretical conceptual underpinning. The theory is only valid in the real world if two critical assumptions hold good. These theoretical assumptions are, of course, rebuttable in the real world.”
