Pension funds in Europe now have to report more information to officials and stakeholders than ever before. In the UK, there are concerns the growing administrative burden of reporting could kill off smaller schemes.

The Pensions Act 2004 brought some marked changes in reporting requirements, says Patrick Bloomfield, partner and actuary at Hymans Robertson in London. But before that, the 1995 Pensions Act had already tightened things up quite a lot, he says. "It was really about trying to improve the minimum standard," he says. "One of the problems with it is that for a very small scheme it can be a disproportionate burden," says Bloomfield. Larger pension schemes, however, find it easier to deal with. The two main things that changed for pension funds with the 2004 legislation was the entry of the new Pensions Regulator, and the increased emphasis and responsibility put onto the trustees of a scheme, he says. Both of these bring elements of reporting with them.

Extra reporting requirements mean extra costs for pension schemes, and this can threaten the existence of
some. "It is placing them beyond the reach of smaller enterprises," says Bloomfield. Charlie Finch, consultant at Lane Clark & Peacock, and co-author of the firm's annual ‘Accounting for Pensions Survey', says there may be pension schemes that are already failing to cope.

"I wouldn't be surprised if there are some small schemes falling behind, and potentially they could get fined if they don't meet the requirements," he says. As well as their interaction with the regulator, pension schemes also have to report to the Pensions Protection Fund, Bloomfield says. Schemes have an annual scheme return to complete and submit, and there are other reports, including a valuation certificate and certificate of deficit-reduction contributions.

"All of that is more work to undertake," he says.

On the company reporting side, there is ever more disclosure required for pension funds under IAS19, he says. The basic data requirements may not change, but the supporting information requirements tend to expand, he says.

More information must be provided for members too, as a result of the 2004 Act, Bloomfield says, adding that schemes must provide members with an annual funding update and a summary funding statement detailing the funding and solvency position of the fund.

Whether these funding statements are of value is an open question, argues Ken MacIntyre, policy adviser at the National Association of Pension Funds. But the requirement is written into European law, he says. "It would also make sense to coordinate these (reports to members) so they happen at the same time."

Finch says reporting requirements have increased no end since last year's sweeping ‘A-Day' changes to pensions taxation in the UK.

Separately, the pensions regulator has been collecting large amounts of data, and one of its main objectives is to be able to identify where the key risks lie, says Finch.

"There's no doubt there's more reporting. The pensions regulator is much more active, and the Revenue has also been much more active after A-Day," he says. "A lot of the bigger pension funds have had advice and put assessments in place, but some funds are lagging behind."

The Department of Work and Pensions is reviewing the issue of disclosure and information requirements, and looking to streamline them, says Ken MacIntyre, policy adviser at the National Association of Pension Funds. He says the association has "pushed for a regime which sets out principles of what needs to be done", rather than bald rules.


In the Netherlands, reporting requirements have increased too. Since the Pensions Act came into force in January, pension funds have had to comply with the principles on fund governance drawn up by the social partners, says the Dutch Association of Industry-wide Pension Funds (VB).

The Act also contains new requirements about information on the participants and people with deferred pension rights. And there are also requirements under the financial assessment framework - another part of the Act - for a minimum cover ratio, assets and liabilities.

The Pensions Act lays out certain conditions for annual reporting as well. "For the larger pension funds, there are not many changes, only that they also have to report their liabilities at market value," says Peter Borgdorff, director of the VB. But small funds used to be exempt from part of this, and now they have lost that exemption. "Each f und, large or small, has to meet the same requirements," he says.

Reporting requirements were stepped up at the beginning of 2002, says Henk Bogerd, controller of the TNO pension fund in the Netherlands. "The regulations state that we have to report four times a year rather than once, so this is quite a big difference," he says.

As well as this, Bogerd adds, the Dutch National Bank requires the pension funds to give more information - initially on paper, but now electronically. Data to be reported includes whether the scheme is DB (defined benefit) or DC (defined contribution), the level of premiums, whether extra income such as bonuses is included, and whether dependants are included in the scheme.

"It is an extra burden at the start, but when we move further on and it becomes normal procedure, it won't really be," says Bogerd. "Internally, you have to report on a monthly basis anyway." He says the pressure for more stringent reporting has arisen generally rather than from any one body.

"Expectations of society have changed, and so the pressure has come from public opinion," he says. In any case, the extra reporting will contribute to the trust in pension funds, he says. In the UK, MacIntyre also sees a positive side to the collection of data that all the extra reporting produces.

The Pensions Regulator has been able to produce its ‘Purple Book' - a risk profile of the DB pensions universe. "We now have a much better idea about this, so that has to be good," he says.