Pensions Accounts User Guide

Introduction

This user guide provides accounts preparers with guidance on the preparation of Annual Reports under the 2018 Pensions SORP, FRS 102 and other regulatory guidance including the Occupational Pension Schemes (Requirement to obtain Audited Accounts and a Statement from the Auditor) Regulations 2016 (Statutory Instrument Number 229). 

Scope

This Pensions Master Pack has been produced to provide compliant accounts for the following types of pension funds:

• Defined benefit (DB) schemes
• Defined contribution/money purchase (DC) schemes that require a set of financial statements to be produced
• Hybrid schemes - ie, where there are both DB and DC elements
• Small self-administered schemes (SSAS)

The pack does not cover the following schemes:

• Ear marked money purchase schemes
• Relevant ear marked money purchased schemes

The pack does not include:

• Lead schedules
• Management account formats
• Exception report 

Client creation

Create the client in Central if it does not already exist:

• Client type = Not for profit organisation
• Business type = Other

On the Accounts Production tab, click in the grid to create a new accounting period, using the settings below:

• Type = Pension
• Entity = UK Pension Fund
• Master Pack = Most recent version
• Chart = Can be either 3 digit or 4 digit, depending on what your firm is accustomed to. If there is no past experience, choose 4 digit.

Small self-administered schemes (SSAS)

See Appendix B.

Hybrid schemes

See Appendix C.

Is an audit required?

Section 47 of the Pensions Act 1995 requires the trustees or managers of every occupational pension scheme to appoint auditors. Non-compliance by a trustee or manager with this section of the Act is subject to a civil penalty. The scheme Administration Regulations (S1 1996 No 1715, regulation 3) exempt a number of schemes from appointing Scheme Auditors. The schemes which are exempt from appointing a Scheme Auditor, include:

• Superannuation funds (schemes under section 615(6) of the Taxes Act).
• Unfunded schemes.
• Money purchase Small Self-Administrated Schemes (SSASs) where all members are trustees and all decisions are by unanimous agreement.
• Non-approved schemes.
• Schemes guaranteed by the Crown.
• Salvation Army, Devonport and Rosyth Royal Dockyards, Atomic Weapons Establishment and certain British Rail schemes.
• Certain public service schemes.
• Schemes with less than two members.
• Schemes providing only death benefits and which provide no accrued rights.
• Relevant earmarked schemes, which are money, purchased schemes where all benefits are secured by insurance or annuity contracts. These benefits are specifically allocated to individual members, and all members are trustees and all decisions are by unanimous agreement (SI 1997 No. 786).

Advisors and addresses

In a similar way to how the Limited Company Master Pack works, details of the Advisors and Addresses relating the Pension Scheme are obtained using Central Associations. Pension Schemes have additional advisors and address types compared to a normal limited company job. The list of Advisors that can be included in the statutory accounts is as follows:

Other advisor 2 can have a title added to their name and this should reflect their position or occupation. This can be input using the Alias field on the Central Contact record.

The commonly used advisor types can have their titles overridden in the statutory database:

Trustees and advisors

The Trustees of the Pension fund should be entered via the Officers screen. This is a simplified version of the same screen in the company Master Pack. For pension schemes you only need to show the list of trustees along with the date of appointment and/or retirement.

Nominal ledger

The nominal ledger structure differs from other FRS 102 entities in that it continues to use the legacy 3 and 4 digit UK Pension charts. 

Statutory database entries

The Statutory database reflects the key information needed for the scheme as a whole and the various sections of the acccounts, eg:

Trustees’ annual report

This operates in the same way as the Directors’ report section in the company FRS 102 Master Pack. The headings shown indicate the general requirements of this report. Where possible standard wordings have been included as a basis for tailoring to the pension scheme’s circumstances. Within the master paragraphs there are a lot of suggestions. These suggested paragraphs have been prefixed with asterisks, eg as follows:

“**Particulars of how the scheme is managed, including:|who has powers to appoint and remove trustees, and method of appointment;|frequency of meetings, voting arrangements;|composition of the board of trustees including the number appointed by members and those by employers;|etc.

The Trustees Responsibilities Statement has been presented as a separate format, similar to the company FRS 102 and in line with proforma accounts. If you wish to include it as part of the main Trustees report there is a trigger question (#cz68) to allow this:

The membership of the scheme must be disclosed, split into beneficiaries, active members, deferred members, and pensioner members. The SORP suggests that this information be presented as a reconciliation from last year’s numbers, along with an explanation of any significant increase or decrease in membership. The Actuarial Liabilities disclosure may likewise be included with the main Trustee’s Annual Report, or presented as a separate disclosure as preferred by using the trigger question #px412:

The signatories for the Trustees’ Annual Report are specified in the Officers Screen.

Audit report

This is consistent with that included in the FRS 102 Company master pack, but with references to the relevant pensions legislation.

Auditor's statement about contributions

This is a requirement to provide a statement as to whether, in the auditor's opinion, contributions have been paid in all material respects, in accordance with the Schedule of Contributions or Payment Schedule.

This would be a requirement for all occupational pension schemes that are required to have audited financial statements, with the rare exception where the scheme has at least 20 participating employers. [Regulation 4 of the Audited Accounts Regulations]

The user chooses whether this is required:

Accountants’ report

This is consistent with that included in the FRS 102 Company master pack.

Actuarial statement

The statement is required for defined benefit plans only. The Disclosure Regulations require the  annual report to contain a copy of the appropriate certificate by the actuary under section 227 of the Pension Act 2004 about the adequacy of the contributions payable towards the scheme (certification of schedule of contributions). See SORP 3.34.7 for further details.

It has two parts:

• Adequacy of the rates of contribution
• Adherence to the Statement of Funding Principles.

Dates relating to the actuarial review are required for inclusion in other sections of the accounts, even where the actuarial statement itself is not required within the accounts.

Accounting policies

There are default paragraphs for the various policies, which should be tailored to the circumstances of the pension fund.

Notes to the accounts

The notes are listed below in the order in which they appear in the financial statements. Each of the notes has their own section within the Statutory Database and for some of them the only field they contain is a memo field for extra text.

Reconciliation of investments : This note includes various paragraphs as required by the SORP if applicable. It also includes two grids for entry of figures for disclosure purposes:

• Transaction costs, and
• Defined contribution assets allocated to members and trustees.

Spare Investment headings: There are two user defined investment headings. These correspond to the following nominal codes:
Spare 1 – 754.01 – 754.08
Spare 2 – 754.11 – 754.18

Property: We have included five paragraphs for detailed disclosure as required by the SORP. The Guidance Notes detail what is required for paragraphs 1 to 4. The fifth is a free text paragraph.

Pooled investment vehicles : There are three user defined PIV headings. These correspond to the following nominal codes:
Spare 1 – 751.71 – 754.78
Spare 2 – 754.81 – 754.88
Spare 3 – 754.91 – 754.98

Derivatives: There are four categories of derivatives; Futures, Swaps, Options and Forward Foreign Exchange Contracts. These correspond to the following nominal codes:

Disclosure of objectives and policies for holding derivatives is given via paragraphs. Disclosure of key contract details is given in a grid; we have allowed for five different descriptions for each category.

Example: 

The nominal totals for assets and liabilities for each category are included, to confirm analysed correctly. Liability figures should be entered with a lead minus sign.

Intangible assets and Tangible fixed assets: The column headers are provided by default but may be changed to suit the client’s situation.

Self investment: There are two master paragraphs: one for when there is no self investment, and the other for details where there is self investment.

Insurance policies: There is a grid to analyse up to five different insurance policy descriptions.

AVC investments: There is a grid to enter descriptions of up to five AVC investments. These correspond to the five sub code analysis of nominal code 750.

Fair value determination: A grid is provided to enter the level 1, 2 and 3 values.

Investment risk disclosures: The disclosures required by the SORP for the various types of investment risk have been catered for via various paragraphs. Investment strategy is split between Defined Benefit and Defined Contribution. Five paragraphs have been included for disclosures re each type of risk.

Borrowings: This section includes the maturity analysis required.

Members’ information

If required, a page can be included with the Accounts detailing general information about Pension services that may be of interest to the Members of the scheme. This can be printed via the trigger question #px460:

Where the page is triggered, the user can tailor the individual paragraphs

Actuarial certificate

The final section in the Statutory Database allows the entry of details that will appear on the Actuarial Certificate included at the end of the accounts:

Appendix A – Formats guide

Detailed below is a list of the Master Pages and Notes for each type of fund.

Appendix B - Small self-administered schemes (SSAS)

Appendix C - Hybrid schemes

Funds with multiple benefit structures sometimes comprise two discrete sections within the terms of the trust deed, namely:

• A defined benefit section, and
• A defined contribution section.

Since the interests of the members and calculations of benefits attributable to each section differ, these need to be separately identified and expressed in the financial statements. Clear segregation of investments between the two sections is necessary in order to determine the calculation and provision of benefits to members.