Spring clean your accounts!
Clear out the dust and cobwebs from your pension scheme’s accounts. It’s time to tidy up those accounts and make the most of your time and energy.
For homes, spring cleaning is something of a relic. Modern heating methods don’t leave behind the accumulation of soot that used to require deep cleaning after every winter.
Your pension scheme’s accounts, though, are another story. Many years of preparation and scrutiny by trustees and professional advisers (including your auditors) can leave you with a clutter of unnecessary disclosures, duplications and effort that may be wasting your time and make your life more complicated than necessary.
In this article, we’ll concentrate on ways to tidy up your accounts. In the next issue, we’ll cover the importance of setting objectives for professional advisers.
So roll up your sleeves and let’s get to work.
Simplify investment notes
Invitations to tender always ask for one piece of advice which is, “If you could change one thing about our accounts what would that be?” Answer: Simplify and clarify your investment disclosures.
Use Plain English and avoid jargon.
Trustees’ reports tend to include lots of jargon. More often than not from their investment consultants. 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 most 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 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.
Does it add value?
What’s the point of having information in the Report and Accounts if it doesn’t add anything to the users understanding of the accounts or is really not needed. We would recommend that every 4 years (or World Cup) that you do a thorough Spring Clean of your accounts to eliminate superfluous information to save you time and money.
Some accounts just seem to flow. And I have no doubt that they are easier to update from one year to the next too. We would suggest that the Chair’s Statement, Actuarial Certificates, Recovery Plans and Implementation Statements are placed later in the accounts rather than in the main body of the document. Nobody wants to go through “War and Peace” in order to get to the Financial Statements.
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