The Pensions Regulator has published a discussion paper putting forward new proposals on the content of scheme reports and accounts to be included in the next Statement of Recommended Practice (SORP) for pensions.
The 39 page report sets out the findings of a year long review by a working group chaired by the Pensions Regulator which considered the implications of the recent changes have had for pension scheme reports and accounts.
As a result the body has put forward five proposals for discussion and comment which should be made before the 25 August:
- Inclusion of a governance statement in the trustees’ annual report and accounts, which would cover aspects such as the extent and nature of trustee training and the effectiveness of risk management procedures.
- The removal of miscellaneous compliance disclosures (often grouped together into a compliance statement) on the basis it should make room for more important disclosures such as governance statements.
- For defined benefit (DB) schemes there should be included an informative statement setting out the funding position of the scheme, including any shortfall against technical provisions and full buy-out liability as well as public information on the strength of the employer covenant.
- Inclusion of the recovery plan in the report and accounts as given the importance of clear communication there are good arguments for including extracts or all of the plan in the funding section of the annual report, such as the schedule of contributions.
- Enhanced investment disclosure for defined contribution (DC) schemes as investment performance is of particular importance in terms of which funds are performing bets and worse, with a one, three and five year performance history providing a balanced overview.
The Regulator says feedback will be taken into account by both the Accounting Standards Board’s research project, and the work of the Pensions Research Accountants Group (PRAG) who plan to issue an Exposure Draft later in the year which will in turn lead to a revised SORP.
John Ashcroft, head of strategy at the Pensions Regulator, says: “We have identified the key stakeholders, set out what we understand are their information needs, looked for gaps in the existing framework and have set out proposals for filling those gaps.”
As a result he says the Regulator is particularly looking for comments on a possible package of measures to meet these needs and for feedback on the potential impact on cost.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Nyree Stewart on 020 7968 4558 or email [email protected]IFAonline
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