Many pension schemes outsource aspects of the pension activities to third party administrators, these tasks range from pension payroll, accounts preparation, contributions collection and investment to name a few. AAF 01/20 has been developed to enable third party administrators to get independent assurance over relevant control activities. AAF 01/20 replaces AAF 01/06 and was effective for periods beginning on or after 1 July 2020.
We have 5 top tips from working with pension administration providers on how to transition to the new AAF 01/20. These include:
- Hold the project planning meeting early to discuss the new AAF 01/20 requirements.
- Updating control activities before the reporting date
- Discuss what is sufficient appropriate evidence to demonstrate the control has operated effectively during the period
- Collate evidence through out the period as to spread out the resource require to complete the AAF 01/20
- Regular communication, and progress meetings to evaluate the project throughout and manage queries as they arise
By working together with pension administration providers, clear project plans are created with realistic target dates set for all. As the service auditor we work together with pension administration providers on delivering a comprehensive AAF 01/20 which demonstrates to clients how control activities operated during the reporting period.
AAF 01/20 allows pension administration providers to formally demonstrate their specific control activities and report for a period these have met the control objectives set out in the Technical Release. Other benefits to completing AAF 01/20 are processes and procedures are documented and can be standardised across teams and improvement learnings can be adopted.
As service auditors we strive to add value to the AAF 01/20 process by providing business insight, improvement findings and sharing knowledge from working with others in the pension industry.