The National Pension Commission has empowered Pension Fund Administrators to appoint external auditors and actuaries for Approved Existing Schemes and Additional Benefits Schemes.
This was indicated in the latest circular from the pension industry regulator directed at all licensed PFAs, signed by the Director of the Surveillance Department, A. M. Saleem.
PenCom revealed that the directive followed the failure of the Trustees/Sponsor Companies of the pension schemes to appoint external auditors and actuaries for the schemes as mandated by law.
Section 50(2) of the Pension Reform Act 2014 states that “an employer operating any Defined Benefits Scheme shall undertake, at the end of every financial year, an actuarial valuation to determine the adequacy of its pension fund assets.” Similarly, Section 2.1(3) of the Framework for the Establishment of ABS issued by the Commission mandates Trustees/Sponsor Companies of AES/ABS to appoint an actuarial firm and external auditor to undertake an actuarial valuation and audit of the scheme, respectively, in accordance with the provisions of Sections 50(2) and 66(2) of the PRA 2014.
However, PenCom said its supervisory oversight of the PFAs revealed that most Trustees/Sponsor Companies of AES/ABS are in default and have failed to appoint an actuarial firm and external auditor to undertake the required valuations and audits.
“The failure of the Trustees/Sponsor Companies to appoint the auditors and actuaries poses a risk to the going concern of the schemes’ ability to meet obligations to members and is a violation of the PRA 2014 and regulations issued by the Commission,” said PenCom.
The regulator laid down new guidelines to ensure compliance, stating: “(i) Two months before the end of each financial year (31 December), the PFA or the Lead PFA of the AES/ABS shall notify the Trustees/Sponsor Companies to appoint an external auditor and an actuary. (ii) The PFA shall send a reminder if the Trustee/Sponsor Company has not made the appointment within 21 days of receiving the PFA’s letter. The reminder shall state that if no formal response is received after five working days, the PFA will proceed to appoint an external auditor and actuary and forward the terms of engagement to the Commission for approval.
“(iii) Upon receipt of approval from the Commission, the PFA shall notify the Trustee or Sponsor Companies of the terms of engagement. (iv) The PFA shall also inform the Trustee or Sponsor Companies that the audit/actuarial fees shall be charged to the related scheme under the management of the PFA after obtaining the Commission’s approval.”
Meanwhile, PenCom has directed all Federal Government self-funded agencies whose salary structures have been captured in the National Salaries, Incomes and Wages Commission circulars to implement the various pension increases for eligible retirees. Agencies not mentioned in NSIWC circulars are advised to liaise with the NSIWC to determine the appropriate pension increases applicable to their retirees.
