The Pensions Research Accountants Group (PRAG) has published proposed amendments to the statement of recommended practice (SORP) on the financial reports of pension schemes.
I was approached yesterday by Con Keating demanding that I give this prominence on this blog and I have. He was instrumental in much of what went into the 2018 SORP and he is showing no signs of letting up in ensuring that pension schemes report accurately and relevantly. The work of PRAG and those who depend on it is not properly respected – and that includes by this blog and by Pension PlayPen and AgeWage. Here are the details of what is going on taken from Jonathan Stapleton’s article in Professional Pensions.
PRAG – the body recognised by the Financial Reporting Council (FRC) as the appropriate organisation to issue SORPs for pension schemes – said that, since the SORP was last reviewed and updated in 2018, the FRC had made a number of amendments to FRS 102, the principal accounting standard applicable to pension schemes in the UK.
It said there have also been a number of industry developments which impact on pension scheme financial reporting, for example in pension scheme investment strategies, and added there had also been changes to pensions legislation and regulations.
The accounting body added it had reflected these changes in its draft SORP and was now consulting on the amendments.
PRAG SORP working party chair Andy Lowe said: “We have reflected the changes to FRS 102 in the revised SORP, and have also consulted extensively across stakeholder groups as to any proposed changes to the SORP, and received a number of suggestions for amendments, additional clarifications and illustrative examples.”
“We thank all parties, including the FRC, for their engagement in the process of updating the SORP. We are committed to developing the SORP based on evidence from consultation with all stakeholders, including users, preparers and others; and very much welcome comments on the draft SORP.”
All documents can be found at: https://www.prag.org.uk/prag-sorp-consultation-2025
The deadline for submission of comments is Wednesday 17 September 2025.
This is an AI-generated summary of my 3-page response to the PRAG consultation, submitted online yesterday.
I hope it may inspire others at least to submit answers to the 4 key questions posed by PRAG, even if 149 pages of consultation document is far too much for many.
Support for bid pricing:
I agree with the continuation of bid pricing, but suggest considering Volume Weighted Average Price (VWAP) where appropriate, rather than a bid price based on small closing lot sizes.
Annuity provider valuations:
I support the removal of the option for annuity provider valuations but recommend that trustees explain why if they do not obtain a valuation from a scheme actuary where values are material.
Liquidity risk disclosure:
I agree with including liquidity risk in investment risk disclosures. In the SORP detail, however, the
risks of holding illiquid investments in private markets or other assets where daily market trading volumes are low do not seem to be addressed.
Inflation risk concerns:
I expressed disappointment that inflation risk is not considered as a separate category within suggested risk disclosures.
Separation of pooled arrangements:
I support the proposal to separate sole investor pooled arrangements from those pools open to other investors.
Transaction costs in pooled funds:
I agree with extending look-through disclosures in pooled investments, but question the rationale behind excluding transaction costs from these requirements.
Length of draft SORP:
I criticised the draft SORP for being excessively lengthy, suggesting it should be condensed for better accessibility by lay trustees, leaving more of any required detail for appendices.
See also Plain English comment further below.
Fundamental concepts of UK GAAP:
I was surprised to see no mention of conservatism or prudence among the concepts highlighted.
Union access to financial reports:
I believe that trade unions should also have access to financial reports, as established under the Pensions Act 1995. The SORP seems to understate the role of trade unions.
Plain English usage:
I emphasised the need for clearer language in the SORP, reminding PRAG that adherence to Plain English principles should mean clear, concise, and easily understood writing, employing short sentences and clear structure to make text easier to follow by lay trustees and others.
Investment benchmarks:
I suggest the examples of investment benchmarks should include absolute returns and real returns relative to inflation.
Thank you Henry and Con for publicising the work of PRAG and to anyone who provides feedback to our consultation. I would encourage all who read this article, to take a few minutes more to take a closer look, and to hopefully provide a response.
Regards
Andy Chambers
PRAG Director and Press and Publications Officer