Accounting regulator cuts pension scheme levy, warns of future rises
The UK’s Financial Reporting Council (FRC) is to reduce the payments it requests from pension schemes and insurers to fund its oversight work.
The watchdog said it was able to cut its levy requests for the year 2018-19 because it had “collected more than originally estimated” through its pension and insurance levies.
However, it went on to warn that it could be forced to request higher payments over the course of the next three years.
The FRC said in its latest strategy document that it would confirm the level of future levy requests once it had completed a consultation on arrangements for monitoring the quality of actuarial work.
At the moment, defined benefit and defined contribution pension schemes with more than 5,000 members are asked to contribute £3.12 (€3.52) per 100 members.
In January, IPE revealed that some companies might have been unaware that the FRC’s annual levy was voluntary.
One document obtained from the Office of National Statistics (ONS) using the Freedom of Information Act stated: “These guides could be read to indicate that the FRC has or is using statutory powers under the Companies Act 2004 to require payment of the preparers and insurance levy, (ie, the levy here is not voluntary).”
Although the levy is voluntary, the FRC has used the threat of inviting the government to put it on a statutory footing if the voluntary arrangement collapses.
Sources familiar with the issue have told IPE that some local authority pension schemes ignore the requests for payment.
The ONS also established that some firms have refused to pay the levy.
The issue came to the fore in March when Liberal Democrat peer Sharon Bowles tabled a parliamentary question in which she described the FRC’s fundraising efforts as “speculative invoicing”.
The former MEP also challenged the government to assess “the impact of improper charging”.
According to the FRC’s latest budget statement, roughly 4% of its funding comes from pension schemes, while exactly half is provIded by the accountancy and actuarial professions.
In addition to its levy on pension schemes, the FRC also asks business and insurance companies to contribute to its funding requirement.
It wants to raise £1.2m from the pension levy over the course of the next year.