More than one hundred academies and colleges participating in the Hertfordshire County Council Pension Fund have been sent erroneous actuarial reports. These were subsequently used in the preparation of their own financial accounts.
Committee meeting minutes indicate an error in the fund’s actuarial report that led to overstated annual asset returns and an overstatement of Hertfordshire’s funding level.
The mistake happened because incorrect quarterly asset return figures submitted to consultancy Hymans Robertson had not been reviewed and approved by “senior officers”, the minutes state. A council spokesperson confirmed the actuary is not at fault.
Hertfordshire has since introduced controls to ensure that a senior officer in the team will now review and sign off returns. An accompanying audit trail will be provided to the actuary detailing the returns for the relevant time period.
The actuarial reports were sent to 102 employers, who will be reimbursed for audit and accounting costs linked to the error.
A decision has not yet been reached on whether the pension fund or the administering authority will provide the funds for this compensation.
Prospective employers have also been hit
‘Initial asset allocation reports’ were sent to 11 employers looking to join the fund. These reports set out the liabilities at the point of transfer, and the value of assets to be allocated to employers in order to meet these liabilities.
The same error meant that these reports overstated initial funding levels. The recipients were notified of the mistake on December 5 and new IAA reports were issued by December 14.
Had the mistake not been recognised it could have led to an insufficiently high contribution request from the local authority, according to Mark Vincent, partner at consultancy Quantum Advisory.
It could also have affected employers exiting the scheme. “If they thought they’d paid off their debt and the debt was calculated to be too low, then the local authority might have gone back to them saying, ‘We asked for too little, give us some more money’”, he said.
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