Pension scheme auditor services from a specialist firm
Trustees of occupational pension schemes have a legal obligation to appoint a pension scheme auditor. That auditor’s job is to give an independent opinion on whether the scheme’s financial statements present a true and fair view of its financial position. It sounds straightforward, but auditing pension scheme accounts calls for specialist pension knowledge that goes beyond standard financial reporting.
We act as auditor for defined benefit pension plan and defined contribution schemes across the United Kingdom, from single-employer arrangements to multi-employer industry pension fund structures and master trusts. Our team brings expertise in pension scheme audits covering actuarial valuations, investment management, and the audit requirements that trustees need to satisfy. As an ICAEW-regulated audit and assurance firm, we’re also on the audit services panel for several scheme advisers.
Do pension schemes have to be audited?
Yes, with limited exceptions. Under the Pensions Act 1995, all occupational pension schemes with more than one member must appoint an auditor. A pension scheme is a separate legal entity from the sponsoring employer, and its accounts must be independently audited. The only exemptions apply to certain small self-administered schemes and executive pension plans with fewer than 12 members where all members are trustees.
The auditor must be a registered auditor and an independent auditor, free from conflicts of interest with the scheme and its sponsoring employer. The Pensions Regulator enforces these requirements under current legislation and can intervene if a scheme fails to appoint an appropriate auditor. Governance around auditor appointment is an area the Financial Reporting Council also monitors.
What does a pension scheme audit cover?
The scope of the audit examines whether the scheme’s audited accounts give a true and fair view. The auditor will need to obtain sufficient appropriate audit evidence across several areas. Our work typically covers:
- Testing contributions received against payment schedules and the statutory requirements under the scheme rules
- Reviewing the valuation of investments, including pooled funds, directly held assets, and annuity policies
- Checking benefit payments and benefits paid, including transfers out and lump sum calculations
- Assessing the actuarial valuation to understand the assumptions behind it, in close liaison with the scheme actuary
- Evaluating internal controls over membership records and benefit calculations
- Reviewing trustee compliance with the trust deed
- Testing accuracy of disclosures in the annual report, including the statement of investment principles
- Examining the assets and liabilities balance to confirm accurate and complete reporting
The auditor will also review the scheme’s management processes in place around membership data and contribution collection. Where we identify a material misstatement or a control weakness, we raise it immediately with the scheme administrator and trustees so it can be corrected before the accounts are finalised.
What is a pension audit report?
The auditor issues two reports. The first is the audit opinion on the financial statements, which forms part of the scheme’s annual report. This opinion on whether the accounts give a true and fair view is what scheme members, the Pensions Regulator, and the Pension Protection Fund rely on.
The second report is a statement about contributions, confirming whether contributions due under the payment schedule have been received on time. Late or missing contributions must be reported to the Pensions Regulator within a set deadline. We flag potential issues early so trustees can address them before they become regulatory matters.
If the auditor is unable to obtain sufficient appropriate evidence on which to base an opinion, a qualified or disclaimer opinion is issued. This is rare but can happen when the scheme administrator has not provided the actuarial information or valuation report needed. Trustees need to ensure the scheme may provide all requested documentation promptly to reduce the risk of audit delays.
Defined benefit scheme audits
A defined benefit scheme carries a higher level of risk because of the actuarial assumptions involved. Liability valuations depend on discount rates, mortality assumptions, and inflation expectations. The balance sheet of a defined benefit scheme reflects long-term promises that span decades, so even small changes in assumptions can shift the funding position by millions. The financial audit and risk assessment work for these schemes requires deep accounting knowledge and an understanding of actuarial science.
Our approach for defined benefit scheme work includes close liaison with the scheme actuary to understand and challenge the actuarial assumptions. We also review the valuation report and check that the financial reporting treatment is compliant with all relevant regulations and UK pension reporting standards. Achieving full regulatory compliance on the expense of running the scheme and the scheme’s ability to meet its obligations to members is the central question.
Defined contribution and master trust audits
Defined contribution schemes are simpler in terms of liabilities, but still need careful attention to investment valuations, investment manager reporting, member account allocations, and the accuracy of annual benefit statements.
Master trusts have additional regulatory requirements from the Pensions Regulator, including ongoing supervisory oversight, assurance reporting obligations, and specific financial reporting demands. We audit several master trusts and understand the particular demands these structures place on trustees and scheme administrators.
Who needs to be involved in a scheme audit?
A UK pension scheme audit involves several parties. The pension scheme trustees are legally responsible for appointing the auditor and for the accuracy of the accounts. The scheme administrator prepares the financial information and coordinates with the auditor throughout the audit process.
The actuary provides the information that underpins the valuation. The investment manager provides confirmation of asset valuations and holdings. And the auditor brings it all together, testing the evidence and forming an opinion. Pension protection is a shared responsibility, and the audit exists to safeguard the interests of all members.
How long does a statutory audit of a pension scheme take?
Most pension schemes run to 5 April or 31 March year ends. The audited accounts must be completed within seven months of the scheme year end. We plan our work around the scheme’s reporting timetable and the seasonal demand that creates.
For a straightforward defined contribution scheme, the audit process typically takes 2 to 4 weeks of elapsed time. Larger defined benefit scheme audits with complex investment portfolios can take 6 to 10 weeks. We agree timelines and terms of engagement with trustees at the planning stage so there are no surprises.
Our approach
We attend trustee meetings to present findings when needed, and we provide a management letter covering internal control weaknesses, process improvements, and regulatory changes affecting the scheme. Every stakeholder – from trustees to the investment manager to the scheme administrator – receives clear, actionable guidance. This letter is a practical document, not a box-ticking exercise.
We’re a registered audit firm, regulated by ICAEW and on the Register of Statutory Auditors. Our fees are fixed and agreed before work starts, so there’s no balance of uncertainty around costs.
If your scheme needs a new auditor, call us on 0161 832 4451 or request a callback.
