Now that the dust has settled on the new SORP changes, it’s time to clear out the clutter from your scheme's annual report and accounts! A little time spent on a good tidy up of pension scheme disclosure will give you the time to make more improvements on other pressing matters. Unlike your newly-cleared garden and local park, your accounts may be jammed up with many years of unnecessary clutter.

To save your time and make your life easier we offer you 5 top tips to spring clean your annual report and accounts:

1. Use a pension disclosure checklist
   Stick close to your friends and keep your enemies even closer! To decide between what’s a ‘must have’ and what is a ‘nice to have’, get yourself a pension disclosure checklist from your auditor (or ask Sally Tasker). Then get the administrator, auditor and trustees to work together to agree the best format for your scheme to get clarity, consistency, efficiency, and of course, compliance!
2. Critically review your Trustees' Report
   There's a common misconception that the auditor doesn't need to see the Trustees' Report and so it has a tendency to be left until the last minute. In fact, a well drafted Trustees' Report, including membership statistics, provided at the start of the accounts preparation process can be a great help to the audit process as it helps the auditor to analytically review the numbers in the accounts, agree consistency between the Report and the accounts, and confirm complete disclosure. A critical review of your Trustees' Report before the audit starts will produce a much sharper start and completion to the audit process and save time.
3. Simplify your annual report investment notes
   Invitations to tender always ask for one piece of advice which is, "If you could change one thing about our Report and Accounts what would that be?" Answer: “Simplify and clarify your investment disclosures”. These two ideas can help you achieve this (1) Use a graph to present information when comparing investment returns against their benchmark, and (2) ask your administrator to give you a well written generic equity and bond market commentary that could apply to your scheme’s investments, and save you time on getting individual fund manager commentaries that repeat that same things.
4. Use Plain English and avoid jargon
   Investment managers' reports are often full of jargon. Referring to the year's quarters as Q1, Q2, Q3 and Q4 is not unusual, but what do they mean? It may make some sense when the scheme's reporting date is 31 December, but many schemes have either a 31 March or 5 April year-end.
   
   Many investment reports are too long, especially when the trustees use three or more managers. Perhaps you should ask your investment consultants to write a brief investment report written in Plain English that meets the disclosure regulations as part of their service. After all, the SORP (Statement of Recommended Practice) commentary states that the details of investment strategy and performance of the Scheme in aggregate should be disclosed, not just for each manager individually.
5. Be Machiavellian
   Niccolo Machiavelli said: “Minimo Sforza, Massimo Rendimenti” meaning “Use the least effort to the greatest effect!” Take a look at your annual report and accounts and divide them up into pages of information that stays as standing material and information that will need updating each year. Leaving some gaps for the pages that change (and a little bit of white space for the pages that will probably not change) will allow each year’s updates to take place without changing page numbers and references, and help make any updates quicker and more concise.

Following the intention of The Pensions Regulator (TPR) to improve standards of governance and administration as reported in our January newsletter this month’s article highlights the proposals made by the Regulator “Record-keeping: measuring member data (February 2010)” to make sure its guidance “Record-keeping: good practice in measuring member data (December 2008)” is adopted.

Record-keeping: measuring member data (February 2010)
"The Regulator will maintain its focus on supporting trustees to improve standards. But where credible plans are not put in place to address poor record keeping, we will require improvement."
Bill Galvin, Executive director, The Pensions Regulator, (2 February 2010).

Take-up of TPR guidance “Record-keeping: good practice in measuring member data (December 2008)”on common data published (see our February 2009 newsletter) found that only 19% of schemes surveyed had checked that they had all the fundamental common data. Of these, some 53% appeared to be missing more than one item of this data. This and other research findings have led to TPR proposing in its February 2010 consultation, that it will:

1. set targets for the accuracy of the common data held by all schemes
2. use enforcement where necessary to make clear high standards of record-keeping must be adopted, maintained and monitored
3. include specific legal provisions about member record-keeping in the 2012 pension reforms
4. investigate standards of record-keeping and select a sample of schemes for data audits and take action when breaches of legislation are found
5. continue to publish bite-sized record-keeping e-learning modules to complement the updated guidance

Particular areas of interest to note are the:

1. examples of the good business sense for having quality data and making savings through reducing pension liabilities (page 9), and reducing annual administration charges (page 10)
2. list of statutory record-keeping requirements (page 11 and appendix C)
3. analysis by type of pension of the 19 million membership of work-based pensions (page 12)
4. cost of data testing estimations of £0.08 to £3.00 per member, and that the cost of keeping, measuring and recovering missing data is not a regulatory cost, but part of the normal management of administering a pension scheme (page 20)
5. key findings of the research on data and typical problems found such as GMP, postcodes and addresses for deferreds (appendix A)
6. types of scheme change event that give rise to an urgent need to review record-keeping such as wind-up, and events that offer a convenient opportunity such as valuations (appendix B)

The consultation, which lasts up to 27 April 2010, can be viewed on the Regulator's website.

Please email Sally Tasker should you wish to contribute to our next issue.

Independent Trustees are now under the microscope.

The Pension Regulator’s has published a new discussion document on TPR’s Trustee Register. As a result, Ash Shaw has received a number of enquiries from trustees seeking advice on how to create an Internal Controls Report for Independent Trustees.

In response to these enquiries, we have created a Bulletin especially for Independent Trustees who want to obtain their own Internal Controls Report quickly, simply and cost effectively to enable compliance with TPR’s proposed requirements. If you are interested in obtaining a copy, please email Sally Tasker. Our first issue will be sent on Tuesday, 16 March.

To help us help you more swiftly, please send us a brief description of your situation (or a copy of last year's signed accounts if you are looking for new auditors) to Sally Tasker and let us know when would be a convenient time to call you.

If someone else has sent you this web link, why not make sure you get your own copy in future? Sign up to Ash Shaw's free monthly email newsletters and receive the latest information, news, ideas and advice. Focused on small- and medium sized pension schemes, these mailings tell exactly what you need to know, without wasting your valuable time. Sign up now.