PHILIPSBURG--The participant administration of the General Pension Fund APS was “not sufficiently reliable in 2014,” the General Audit Chamber stated in its newly released audit report of the Fund’s 2014 Financial Statements. The audit report was submitted to Parliament and Finance Minister Richard Gibson by the Chamber on July 29.
The Audit Chamber, therefore, recommended APS carry out an integral audit regarding the accuracy and completeness of the participant administration prior to December 31, 2017.
A reliable participant administration should be the core of the Fund’s functioning, said the Audit Chamber, citing that if the participant administration is not sufficiently reliable, the recorded provision, needed to ensure that future pensions can be fully paid, is “also not adequately reliable.”
The APS financial claim against Government increased by a “substantial” amount in 2014, totalling NAf. 80.8 million (at the end of 2013 the claim was NAf. 68.1 million). As a result, APS had fewer funds available in 2014 to be used for potential investment.
The Audit Chamber recommends APS monitor the stipulations set forth in the “Debt Payment Basic Agreement” that it negotiated with Government in February of 2016, to ensure the settlement of the outstanding claim.
Also noted, in the report, is that at the end of 2014, the coverage ratio of APS reached its lowest point since the start of the Fund in 2010. The coverage ratio was 97.6 per cent at the end of 2014, whilst the ratio was 101.4 per cent the year before. This means that at the end of 2014, APS was not able to fully cover their future liabilities with their existing assets.
APS is urged to develop a realistic plan aimed at achieving a healthy coverage ratio of at least 105 per cent.
According to the report, APS operated, for the most part, in compliance with applicable laws and regulations. However, the report also states that for 2014, APS collected a pension premium that was below the legal required rate.
APS collected a premium of 22 per cent instead of the required 25 per cent. As a result, until December 31, 2014, APS failed to collect NAf. 17.1 million that, potentially, could have been invested.
As part of the audit of the Financial Statements of APS, the Audit Chamber reviewed the Asset Liability Management Study conducted in 2014 by APS and found that the study met APS stated objectives. Specifically, the study provided APS with insight as to whether the current pension scheme is still affordable and will remain affordable.
The Audit Chamber, however, cautioned that an Asset Liability Management Study cannot be used as the sole basis when making decisions about the future of the Fund.
On the financials in general, The Audit Chamber issued “a disclaimer of opinion regarding the true and fair representation of the financial position as of December 31, 2014, and the 2014 financial results of the APS.”
The report is published in both English and Dutch and is available on the website of the General Audit Chamber: www.arsxm.org.
