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Actuarial work should be monitored independently and pension scheme liabilities audited, according to PricewaterhouseCoopers.

Responding to the Financial Reporting Council’s consultation, monitoring and scrutiny of actuarial work PwC has called for actuaries’ work to be monitored by an independent inspection unit and for pension schemes to include their liabilities in their accounts.

The Financial Reporting Council is consulting on how to enhance the monitoring and scrutiny of actuaries’ work, as Sir Derek Morris recommended it should do in his 2005 report on the profession.

Peter Tompkins, a partner of PricewaterhouseCoopers, said: “Enhancing quality is in everyone’s interest. One of the most sensible ways to achieve this is for pension schemes to include their liabilities in their accounts and have them audited, as has worked successfully for insurance companies. We must not lose sight of the fact that firms’ own internal procedures and quality standards will always be the key to ensuring high-quality and reliable advice.

“No amount of externally-imposed red-tape – such as a revamped peer-review process – will be as effective as leaving actuaries on the ground to do the right thing for their clients. But it is absolutely vital that this sort of environment is underpinned by checks to quickly identify failings. The reliable way to do this is through expert and independent scrutiny.”

The Financial Reporting Council report stated: “There are a very large number of small pension schemes, and trustees take overall responsibility for decisions taken. Within this context, the pensions regulator regards itself as a regulator and not a supervisor. Consequently its scrutiny of actuarial assumptions will be determined by the assessment of risk to the achievement of its objectives, particularly as it relates to the quality of the decisions made and information produced by trustees and also the sponsoring employers.”

The report concluded that it may adapt a number of strategies, including: no proposed changes to existing arrangements; additional support for existing external regulatory and market practices for monitoring and scrutiny; imposing the profession’s own professional quality assurance requirements; and active monitoring.

Sir John Bourn, chairman of the professional oversight board, said a number of stakeholders believe active monitoring to be the right solution for pensions.

A spokesman for the pensions regulator said: “We welcome the work of the Financial Reporting Council and its operating bodies in raising these important issues and consulting with stakeholders to get a full range of views. We continue to work closely with the council on this and other areas.”