Providing high-end waste management solutions to both the public and private sector, our client is committed to providing quality products and excellent maintenance support. Founded in the 1930s, the company operates across Europe, the Baltics and the Middle East. In the UK, it runs a hybrid pension scheme with defined contribution and defined benefit sections for staff and retired employees. When the trustees decided to appoint a new scheme auditor, they called on WMT for its experience in this sector.
Helping the trustees meet their responsibilities
Our clients are the trustees of a hybrid pension scheme run for former and current employees of the company. One section of the scheme is defined benefit (final salary) where each pension payable is determined by the employee’s final pensionable salary. In the defined contribution section, the amount to be paid to the beneficiary is determined by the funds available when the individual’s pension starts.
The trustees are responsible for ensuring that the pension scheme funds are properly managed. This includes confirming there are sufficient funds to cover pension benefits, and that benefits are paid to the right people.
Few of the trustees have first-hand actuarial or accounting knowledge so they rely on advice and services from experts such as WMT. We help them to meet their responsibilities for safeguarding the interests of the scheme’s members.
In common with most occupational pension schemes, several third parties are involved in our client’s scheme. We liaise effectively with the scheme actuary, administrators, investment manager, trustees and principal employer to make the audit run smoothly. Our experience of managing complicated multi-party projects for clients comes into its own at this time.
The trustees, in common with nearly all funded occupational schemes, have to make an annual report available to members. As the auditor, it’s our job to remain independent and provide an opinion on:
- whether the contributions paid into the schemes were the right amount and added at the right time.
- whether the trustees’ financial statements show a true and fair view of the scheme’s financial transactions, assets and liabilities (other than those to pay pensions and benefits after the ends of the scheme year).
Before we begin the audit each year, we speak with the trustees about their concerns so we can pay particular attention to areas that are of interest to them. They may be interested in understanding the effectiveness of changes to controls, how errors have been rectified, or the impact of any issues the scheme has had during the year. We also review the minutes of trustee meetings and other relevant documents before creating the audit plan.
WMT’s audit includes reviewing the actuary’s valuation and the scheme’s funding requirements, as well as the investment manager’s investment performance report. We compare the investment report to market data and verify any changes to the investment portfolio during the year.
Importantly, we review the effectiveness of the processes and financial controls that the administrator and investment manager have in place in so far as they affect the figures in the financial statements. Any weaknesses identified are highlighted to the trustees in an annual management letter. We are also happy to be involved in trustee meetings where the financial statements are presented to summarise our audit findings and suggest any solutions to issues identified.
More than an annual audit
Knowing that the financial statements and contributions paid to their scheme have been independently reviewed by WMT provides reassurance to members.
Throughout the year, we are on hand to help the trustees with any questions they may have about the scheme accounting and controls. Discussing concerns as they arise reduces the risk of them becoming real issues for the schemes.