PHILIPSBURG--The financial health of the General Pension Fund APS continues to be “not optimal,” said the General Audit Chamber in its recently-released Compliance Audit of the fund’s 2017 Financial Statements.
The audit report, like others with the same conclusion, was handed to Parliament on April 8. Legislators are tasked with reviewing the report and taking action to safeguard the fund either with new or amended laws or by instruction to the cabinet.
The Audit Chamber said although the pension fund’s coverage ratio was 103.1 per cent at the end of 2017, the fund’s financial health is not optimal. “Its financial capital is still insufficient to cover general and investment risks,” according to the report.
The report further explained that the increase of the coverage ratio from 99.6 per cent in 2016 to 103.1 per cent at the end of 2017 is partially based on a two-per-cent investment result.
In previous reports, the Audit Chamber expressed concerns about APS’ suboptimal coverage ratio, and repeatedly recommended preparation and implementation of a recovery plan.
In 2017, the pension fund’s actuary recommended that the fund draft a recovery plan as well. The fund has reported that a recovery plan has since been drafted.
Though the Audit Chamber was not able to familiarize itself with the recovery plan during the audit, the Chamber hopes that it will lead to the achievement of the
105-per- cent coverage ratio. However, measures to achieve a 105-per-cent coverage ratio, should not primarily fall to government, participants or the general population, said the Audit Chamber.
It is the Audit Chamber’s opinion that the pension fund’s 2017 Financial Statements provide a true and fair representation of the fund’s financial position as of December 31, 2017, as well as its 2017 financial result, with the exception of qualifications related to outstanding claims.
The Audit Chamber has established that the pension fund, with the exception of a single provision, is legally compliant. The one item concerns establishment by the board of the investment policy, which did not happen during fiscal year 2017. The pension fund has indicated to the Audit Chamber that this was an omission.
The pension fund’s board reacted to the draft report on March 27. In that reaction, the board indicates placing great importance for completing and/or implementing the various recommendations previously issued by the Audit Chamber. As part of the reaction, the board provided an addendum, listing the status of these recommendations.
The Audit Chamber considers the fact that the pension fund takes its recommendation to heart as a positive development and indicates they will continue to review the pension fund’s progress in the audit of the 2018 Financial Statements.
The audit report is published in English and Dutch and is available on the Audit Chamber’s website www.arsxm.org.
