UK insurance companies are supplying incorrect information to auditors, causing accounts to be filed late and exposing pension trustees to the risk of criminal proceedings, it was claimed last week.
Insurance giant Prudential was named by several auditors as one of several ‘black sheep’ supplying pension scheme auditors with late and even incorrect information. As a result, a significant number of schemes are missing the strict seven-month deadline for filing audited accounts, exposing pension trustees to fines of up to #50,000.
The problems became apparent as the provisions of the new Pensions Act began to bite this year. It has cut the deadline for submitting pension accounts from 12 months to seven and tightened up disclosure requirements.
Some insurers have had difficulty in providing the necessary information, particularly relating to pension scheme members’ additional voluntary contributions (AVCs).
Richard Todd, an Ernst & Young pensions partner, said: ‘Insurance companies should be able to produce this information easily. Clearly, there is a reputation issue.’
He added some auditors were advising clients to change their pension insurance company because of the problem.
The issue was raised at last week’s English ICA pensions conference by KPMG manager Teresa Sienkiewicz. She said: ‘Some insurance companies are slow to provide confirmation of the value of AVCs. Certain insurers seem to have considerable difficulty in establishing any figure.
‘In other cases, the value provided by the insurer has clearly been incorrect, resulting in further delays.’
She added: ‘Pension trustees receive advice from insurers and independent financial advisers that they do not have to comply with aspects of pensions legislation. Such advice is incorrect or misleading.’
An Occupational Pensions Regulatory Authority spokesman said it was aware insurance company inaction was being given as an excuse, but was stepping up action against late files in any case.
Prudential was unable to comment at press time.
Just one half of UK practices have implemented a pricing structure around auto enrolment implementation and advice - with many suffering increased costs
Deloitte's north-west Europe foray; BDO, Smith & Williamson investment paths; Shelley Stock Hutter; and Wilkins Kennedy discussed by editor Kevin Reed on our Friday Afternoon Live broadcast
Accountants should alter their perspective on auto-enrolment to maximise business opportunities, according to Eric Clapton.
Kevin Reed discusses whether new accountancy group Cogital can rival the Big Four...and its likely direction of travel