UK - The Financial Services Authority may have to raise the fees it charges providers to plug an £80.6m deficit in its pension scheme.
The FSA is financed by a levy on all the organisations – such as fund managers, consultants, investment banks and financial advisers – it authorises to do business in the UK.
However, in its 2003-04 annual report, the regulator indicates it may have to raise the levy to fulfil its pension obligations because the FRS17 deficit far exceeds the £13.9m it holds in reserve.
The FSA said: “Many UK firms have a large pensions deficit on an FRS17 basis. However, the impact on the FSA is particularly significant because, in light of our statutory powers to raise fees, we deliberately operate with a low level of reserves.
“Although this deficit is a serious matter, we do not believe it impairs our ability to operate as a going concern. The main reasons for this are pensions liabilities do not crystallise for many years and we have statutory powers to raise fees to allow us to meet our obligations.”
The regulator’s annual report shows that the £156.5m FSA Pension Plan’s liabilities have grown from £220.3m in March last year to £237.1m due to salary increases it granted staff in the last financial year.
However, the deficit actually shrank over the 2003-04 financial year due to rising equity markets. The scheme allocates 80% of its assets to equities, and its deficit has fallen from £102.2m to £80.6m in the 12 months to March 31, 2004.
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