UK - Tightening lax administration procedures will help schemes prevent fraud and cut costs from system errors.
Speaking to delegates at the recent Pensions Forum, Watson Wyatt said a scheme could save time and money by checking the accuracy and reliability of its administration department’s work and its compliance with legislation.
The consultant said these checks would also go some way to prevent fraud.
Watson Wyatt head of administration consulting Allan Course said that as an example of where lax administration had a “direct financial impact” on both a scheme and its sponsor, he had uncovered one case where an error by an in-house administrator had cost the firm £250,000. That particular administrator had paid out more than 50 transfer values incorrectly over a three-year period.
He also pointed out that while conducting Watson Wyatt’s scheme administration survey – which is run in conjunction with Professional Pensions – he discovered that this was not an isolated incident.
He said that 15% of trustee boards reported that there had been errors of a “financial consequence” within the past year.
He said: “In every case, the trustees launched an investigation. But why didn’t they do that before?
“Somebody should be there to ask the bright questions of the administration.”
Course also revealed that Watson Wyatt had uncovered a number or cases where lax security in a scheme’s administration department had allowed fraud to take place almost unnoticed.
Most respondents in this week's Pensions Buzz do not think businesses should be able suspend AE contributions if in financial distress.
Former BHS owner Dominic Chappell has lost the appeal against his section 72 conviction and sentence for failing to hand over information to The Pensions Regulator (TPR).
This week's top stories include Marsh and McLennan Companies agreeing to buy JLT, and the home secretary calling for AE to be scrapped in a no-deal Brexit scenario.
Lesley Titcomb says the watchdog wants closer interactions with pension funds to spot problems sooner and act before having to use its more stringent powers