A campaign by UK pension schemes to demand flexible accounting standards is intensifying as many struggle to match assets and liabilities in the face of rising pension deficits.

Rules forcing pension funds to value their assets at market prices and discount their liabilities in line with corporate bond yields should be scrapped, pension strategists argue. In their place pension schemes should adopt a so-called run-off approach which focuses on schemes’ long-term liabilities and how much money is required to pay the pensions of all their members, said Paul Sweeting, European head of strategy with JPMorgan Asset Management.

Funding requirements should be measured according to projected liability cash flows over longer periods and projected assets as well as contributions. “Rather than being forced into investment strategies that reflect the discount rate used, it makes more sense to avoid the use of discount rates altogether and instead to concentrate on cash flows.” – The Financial Times Limited 2013