Charity commission reminds charities of the need for adequate disclosure in the trustees’ annual report regarding pension scheme deficits

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09 May, 2014

The Charity Commission has published the results of a review (“the review”) it carried out of the accounts of charities whose pension schemes are in deficit. The review focused on the charities’ trustees’ annual report and accounts and sought to identify what action the trustees were taking to tackle the deficits.

The Charity Commission identified 740 charities whose accounts reported a pension scheme deficit and then randomly selected 97 of those for a more detailed follow up.  

The review identified that all charities had complied with accounting standards by disclosing information about their pension scheme deficits in their accounts, based on actuarial advice.  However only 32% of the sample explained the financial implications of their deficits and how the trustees planned to deal with them in their annual reports.  The Charity Commission commented that the trustees of charities with significant deficits “missed the opportunity to demonstrate to donors and beneficiaries that they were tackling the problem appropriately”. 

The Charity Commission has used the results of the review to remind trustees of charities with defined benefit pension schemes that “they should have a clear, up to date, picture of their charity’s financial obligations and a plan to manage the likely future contribution increases”.  They further remind trustees that they “should use their charity’s annual report to explain how they are tackling the potentially serious risk of a pension scheme deficit”.

The press release and full report can be obtained from the Charity Commission website.

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