UK companies need to take action to prepare themselves for the impact of IAS 19, Employee Benefits - set to kick in in January 2013 - which will lead to a higher reported pension expense in the profit and loss (P&L) statement and greater balance sheet volatility.

That is the message from global HR specialist, Aon Hewitt, which says businesses may be concentrating on reducing their pension deficits - currently £86bn for the FTSE 350's final salary pension schemes - at the expense of preparing for the new pensions landscape heralded by the introduction of IAS 19.

The changes will apply to companies using International Financial Reporting Standards (IFRS), and those currently using UK GAAP.

Simon Robinson, principal at Aon Hewitt, said: 'While companies continue to be focused on working with trustees to tackle their pension scheme funding deficits, we suspect the introduction of the revised IAS 19 in January 2013 is slipping under the radar of many financial directors.

'Companies are required to make a number of assumptions to calculate their liabilities. While the majority of companies will make a reasonable best estimate for the key assumptions such as life expectancy, there are a number of ancillary assumptions such as retirement patterns, or the proportion of members with spouses, on which they may unintentionally be taking a 'prudent' view.'

Meanwhile, PwC estimates that the changes will bring significant costs to companies supporting pension schemes - up to a £10bn hit to reported profits.

A PwC spokesman said: 'Making the additional disclosures will prove onerous. Some firms will also increase balance sheet volatility, which could cause difficulties for banks and insurers with their capital provision. Consequently some firms may change investment strategies to reduce balance sheet risk.'

However, the accounting changes have been widely anticipated by the investor community.

'Most analysts already ignore any apparent benefits provided by the existing rules when reviewing company accounts. So, while the new IAS 19 will alter balance sheets significantly, by and large it won't change the way companies are perceived by the outside world. What it will do is improve transparency and long-term investor confidence.'