UK – UK pension schemes may have to contribute towards a fund to cover the costs of actuarial discipline cases, according to the Financial Reporting Council.
The outlay will be in addition to the levy they have to pay to support the FRC’s new role of overseeing the actuarial profession.
The FRC said in its 2006/7 budget released today that it has decided to set up a fund to cover actuarial disciplinary case costs, with an initial contribution of £250,000 (€367,000).
It said: “Case costs are potentially volatile from year to year, depending on the number and complexity of cases and, therefore, cannot be subject to firm budgetary limits. We have decided to establish a fund to cover these costs.”
But if case costs are too high then pension funds would have to contribute.
“If in one year case costs exceed the annual contribution the additional cost will be recovered in the following year from insurance companies, pension funds and the actuarial profession in the same proportion as their contributions to the FRC's other costs in relation to the new arrangements,” the FRC said.
But schemes wouldn’t get a rebate if there’s a surplus. “Should the fund exceed the target level the excess will be used to meet the FRC's actuarial operating costs, thereby reducing the costs to the funding groups.”
The FRC took on the oversight of the actuarial profession last year following the Morris Report.
Meanwhile the Association of Consulting Actuaries has elected Watson Wyatt’s Ian Farr as chairman. He takes over on June 1 and succeeds Adrian Waddingham, senior partner at Barnett Waddingham.
Elsewhere, prime minister Tony Blair and chancellor Gordon Brown have come to a deal under which the link between the basic state pension and average earnings is set to be restored.
Reports said the link would not be introduced before 2012 and would be paid for in part by raising the state pension age to 68 by 2050.
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