Internal control needs to be on agenda – Scott
UK - Derek Scott, chairman of trustees for the £1bn (€1.5bn) Stagecoach Group pension fund, says pension funds need to develop a more natural approach to internal control.
Scott, a member of the Institute of Chartered Accountants of Scotland (ICAS) which last week published a guide for trustees on applying risk assessment and risk management techniques, told IPE today: "Internal controls should be on the agenda of every pension scheme this year."
He believes many pension schemes have lost valuable financial expertise within sponsoring companies because many senior executives no longer want to take on the legal responsibilities of becoming full trustees.
The outflow of expertise is particularly noticeable in publicly-listed companies (PLCs), argues Scott.
"I guess if I was a PLC director today, I'd find it very hard to be a pension trustee. At the same time, we don't seem to have regulation now which allows this," he said.
It is one of the reasons there is a level of complacency regarding internal controls, said Scott, adding: "A lot of trustees won't have developed a natural approach to internal control."
He argues the ICAS guide gives detailed support to trustees to see where and to what extent internal control needs to be applied.