The 'knock-on' effects for UK pension schemes in light of the European single currency have been set out in a new booklet released by the UK's National Association of Pension Funds (NAPF).
The association suggests what UK scheme administrators and trustees should be doing to address these changes in Europe and also to anticipate possible UK entry to Emu.
One example of this concerns trustees obliged to prepare a payment schedule for defined contribution schemes. If a sponsoring employer decides voluntarily to make contributions in euro after January 1999, this schedule will need to be converted into euro. Alternatively, it will require dual accounting if the UK is still outside Emu. These same rules also apply to defined benefit plans.
The NAPF recommends schemes conduct a 'euro audit' and appoint a 'euro co-ordinator' to ensure they are not adversely affected by Emu.
Regarding UK entry into Emu, the NAPF recommends the preparation of new 'euro' pension scheme booklets, as well as the revision of accounts systems to accomodate future dual currency administration.
These, the report stresses, should be part of a 'euro-ready' plan, which will look at the effects on key issues such as the differences to come in government bond yields due to changes in credit risk under Emu, or the figure rounding systems to be adhered to under new EC legislation.
The booklet is being issued to all NAPF members, with subsequent copies available at £3 ($4.86)to members and £5 to non-members. from the National Association of Pension Funds, 12-18 Grosvenor Gardens, London, SW1W ODH, Tel: 0171 730 0585