Auditing operation No. 04/37
State Budget funds provided as a state contribution to supplementary pension insurance participants
The auditing operation was included in the Annual Audit Plan of the Supreme Audit Office (hereinafter referred to as “SAO”) for the year 2004 under No. 04/37. The auditing operation was managed and audit conclusion drawn up by Ms. Jana Krejčová, the Member of the SAO.
The aim of the audit was to examine the management of the State Budget funds provided to pension funds.
The audited period covered the years 2001 to 2003 as well as previous periods in case of relevant connections.
The audited bodies were the Ministry of Finance, ABN AMRO Penzijní fond, a. s., CREDIT SUISSE LIFE & PENSIONS PENZIJNÍ FOND, a. s., ČSOB Penzijní fond Stabilita, a. s., Penzijní fond České pojišťovny, a. s., Penzijní fond České spořitelny, a. s.
The Ministry of Finance
- Did not, bar a few exceptions, impose sanctions (fines, penalties) on the pension funds for the late return of state contributions, even though it possessed the necessary information in its information system;
- Does not prevent the possibilities for demanding state contributions a long time retroactively or the contracts that has been already finished; without performing controls it therefore cannot ensure that these state contributions are disbursed at a later date to a participant or returned to the State Budget and thus become part of the pension fund’s revenues;
- Failed to make use of its legal authority to issue a decree, e.g. for specifying the particulars required of applications for state contributions, which would resolve their lack of binding force;
- Made insufficient use of outputs from the information system for performing controls at pension funds and motivating them to comply with the legally defined deadlines for returning state contributions in the cases laid down by law;
- Insufficiently informed the pension funds about the manner for returning state contributions of amounts different to those calculated by the Ministry of Finance’s information system;
- Did not propose legislation that would lay down, in the event of a participant dying and his supplementary pension insurance funds becoming the subject of inheritance proceedings, a realistically observable deadline for returning state contributions demanded for this supplementary pension insurance.
The pension funds
- Often paid insufficient attention to entering data into the Ministry of Finance’s information system; this led to errors, often repeated, where state contributions were applied for and credited to the participant’s account late, which could mean that revenues from these state contributions were not provided for this period, or where state contributions were returned to the State Budget after the legally prescribed deadlines had passed;
- Paid insufficient heed to the need for speedy communication, especially during transfers of participants’ supplementary pension insurance between pension funds, causing the supplementary pension insurance of participants to be terminated by the Ministry of Finance’s information system;
- Have in some cases shortcomings in their records of supplementary pension insurance participants and in their archives of documents related to individual supplementary pension insurance contracts;
- Did not always consistently comply with Act No. 42/1994 Coll. – maintaining accounts at other banks than the depositary, concluding other products than supplementary pension insurance;
- Did not transfer back revenues from state contributions that were applied for late through the fault of a pension fund to all authorised participants, but ordinarilly only to those participants who complained about this error.