Atkin trustees, actuaries, consultants & administrators

Current issues - August 2018

CMA provisional findings on fiduciary management (FM): For schemes that have either adopted, or are considering adopting, fiduciary management the CMA report does highlight some areas of concern which Trustees should be aware of. The CMA stresses the importance of carrying out a competitive (re-) tender exercise to ensure that you appoint the most appropriate manager and to make sure that the manager has sufficient reporting in place to enable you to understand both their performance and fees.

Schemes where the investment consultancy firm also provide fiduciary management services should take especial care and, potentially consider, getting a second opinion.

Pension Scams – Risk to Trustees if they fail to give warnings: The Pensions Ombudsman has ordered that a member have their benefits reinstated and pay compensation to a member who transferred to a scam arrangement due to administration failings. Trustees should ensure that they are comfortable that administrators are taking sufficient steps to protected their members and, in particular, may want to confirm what processes in place in respect of transfers to protect members from scams and, for overseas transfers, that they are ensuring that the overseas transfer charge is being applied appropriately.

Company Dividends – TPR keen to see schemes treated fairly: TPR has voiced its concern about dividend payments to shareholders that are in excess of deficit reduction contributions when a scheme has a deficit and a long recovery plan. Trustees should monitor any significant changes to their sponsor covenant (including dividend payments, share buy backs and changes in corporate structure) to try and make sure that member’s benefits are being protected. This is a area of focus of TPR and Trustees can expect to be asked questions about how they are managing and mitigating risks in this area as part of the triennial valuation process.

TPR warns schemes could unwittingly become master trusts: Schemes making changes to their benefit structure need to take care that they do not get classed as Master Trusts (which requires the Scheme to obtain authorization from TPR, or otherwise, be wound up). The TPR has suggested that, when in doubt, Schemes discuss the proposed changes with them before carrying them out.

Audit burden on pension company accounting disclosures likely to increase: The headache that pension accounting disclosures pose many companies is likely to worsen with the UK Financial Reporting Council (FRC) suggesting that there is “some scope for improvement in a number of aspects” of the work carried out by auditors. This may lead to additional work being carried out and auditors being less inclined to use their judgement when assessing the appropriateness of assumptions.

Companies may want to be confirm with  their auditors how they intend to evaluate the pension scheme disclosures to make sure that a proportionate and pragmatic approach is being adopted.

 

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I have worked with Atkin & Co for many years and with Angela Norman in particular. My experience is that they are very professional and well organised, demonstrating a high level of integrity in the work they do and the information that they supply. Always helpful, Atkin & Co adopt a pragmatic approach to resolving problems if they arise.

Peter Wilkes, Harben Barker