CFM95940 - Interest restriction: group-interest: pension schemes

Pension schemes

Where a group has a funded pension scheme, then relevant income and expense amounts will not include any profits and losses on loans owed by or held by the pension scheme.

In this situation, all amounts recognised as items of profit or loss in the group’s financial statements in respect of a pension scheme will be included in the calculation of group-EBITDA. Amounts recognised in other comprehensive statements will not be included in either group-interest or group-EBITDA.

The reference to pension scheme takes a wide meaning, but there needs to be a legal framework which gives the pension scheme its existence. So, in particular, there needs to be one or more instruments or agreements which give effect to the pension scheme.

Pension reserve assets

Where, however, a group holds pension assets on a company balance sheet as pension reserve assets rather than directly in a pension scheme then relevant income and expense amounts will include the profits and losses on these loans.