The Pensions Regulator

Summing up - financials hit the mark says Regulator

Ref: PN06-04
10 February 2006

The Pensions Regulator welcomes clear communications in financial reporting.

One of the regulator's statutory objectives is to promote, and to improve understanding of, the good administration of work-based pension schemes. Clear communication by pension trustees to their principal stakeholders and members on the scheme's financial health is an essential aspect of a well governed pension fund.

It's not surprising then that the annual Pensions Research Accountants Group (PRAG) financial summary reports award, which will be presented in June 2006, pushes all the right buttons for the regulator. The PRAG award 2006 encourages good financial reporting by schemes, and this year there are additional categories aimed at smaller schemes. The closing date for entries is 28 February and entry details can be found on the PRAG website, www.prag.org.uk/156/

John Ashcroft, head of strategy at the Pensions Regulator, has recently been appointed to the Pensions Advisory Panel formed by the Accounting Standards Board (ASB) as part of its research project into financial reporting of pensions.

On his appointment to the advisory group, John Ashcroft said:

"It is a privilege to be involved at this early stage to help formulate the future of pensions accounting. Transparency and accountability, along with informed choice for members, lie at the heart of good scheme administration. Initiatives such as this PRAG award offer industry recognition for trustees who implement best practice in financial reporting, irrespective of scheme size."

Commenting on the importance of best practice, Jeff Highfield, Chairman of PRAG said:

"Now more than ever pension scheme members need access to information about their pension scheme so that they can make well-informed financial planning decisions. A lot of accounting and actuarial information on pension schemes can be dauntingly technical. That is why PRAG is committed to the financial summary reports award to celebrate best practice in the area of communicating financial information to scheme members that is accessible, understandable and makes readers give it the attention it deserves. Extending the award categories to include smaller schemes will also help demonstrate that effective financial communication need not be prohibitively expensive, especially if you use electronic forms of communication."

Editor's notes

1. The Accounting Standards Board (ASB), part of the Financial Reporting Council, announced its research project into the financial reporting of pensions on 14 October 2005. For further information visit www.frc.org.uk/asb.
2. The working group chaired by the regulator to review the content of pension scheme accounts included wide representation from industry experts.
3. PRAG is an independent research and discussion group. For further information about PRAG and their summary reports award visit http://www.prag.org.uk/.
4. The Pensions Regulator has been established as the new regulator of work-based pensions in the UK, with wider and more flexible powers under the Pensions Act 2004. It has replaced Opra which no longer exists.
5. The new powers of the Pensions Regulator include the ability to:
   • collect more detailed scheme information;
   • issue improvement notices and third party notices, enabling the regulator to ensure problems are put right;
   • freeze a scheme that is at risk, while the regulator investigates; and
   • prohibit trustees who are judged not fit and proper to carry out their duties.

   The Pensions Act 2004 also imposes a statutory obligation on 'whistleblowers' to report suspected breaches of the legislation to the regulator.