ICAEW Axes Defined Benefit Pension Scheme

In June 2006 I wrote:

"Given the ever increasing pension black hole in the ICAEW accounts (it has grown by £4M over the last year), it is hardly surprising that the ICAEW has asked to raise subscriptions this year by 4% (which, despite their denials, is above inflation).

The triannual actuarial review will be carried out later this year and, as sure as eggs are eggs, we can assume that the black hole will have increased.

The astute amongst you will realise that the ICAEW will therefore be again coming cap in hand to its members, to ask for another inflation busting subscription increase in 2008.

Given these never ending increases in staff costs, why did the ICAEW hire 125 more people in 2006?

Do they regard the membership as a docile compliant cash cow which can be milked to death?"

The ICAEW have finally realised that the current arrangement, whereby subscriptions are increased each year to fund the pension black hole, is unsustainable. Therefore the ICAEW is going to cancel the final salary (defined benefit) pension scheme (closed to new members since 2000) next year.

Accountancy Age quote an ICAEW spokesman:

"A spokesperson for the ICAEW said that the fund had become too costly in its current form and that the volatility of the market made it difficult to determine the amount of funding needed.

We will honour the commitments we have already made to those people in the scheme, and are committed to funding the deficit that exists."

The scheme currently has a £19M deficit.

I don't fully understand "we will honour the commitments we have already made to those people in the scheme".

Given that the scheme has been closed to new members since 2000, the closure implies that those currently in the scheme will have to move to a defined contribution scheme.

On the assumption that is the case, how can the ICAEW "honour commitments to those already in the scheme"?

Tax Matters - Michael Izza

Michael Izza is interviewed by AccountingWEB:

"Q: In the ICAEW's Enterprise survey, 54% of respondents said UK regulatory and tax environment was 'not very' or 'not at all' business friendly. Employment tax and legislation and business tax changes were all regarded a hindrance. Why do you think businesses responded so negatively and what do you think can be done to improve the situation?

A: This is a constant refrain, and we hear this from businesses of all sizes. We have a great opportunity this year because we're moving into the last few months of this government, there has to be an election no later than June 2010 and this is now the time when business people of all sizes can start to talk to their MPs (or prospective MPs) about the things that bother them and the legislative changes they would like to see.

The institute has issued a manifesto and that was something we were talking to politicians about at the three main party conferences in September and October. One of the themes in it is that we need a more simplified government in this country. An area which I'm sure many of your members will be familiar with is the tax code. The tax code in this country now runs to over 11,200 pages.

There is nobody in HMRC who understands that from A-Z. There is no chartered accountant in this country who understands it from A – Z, it's just become too complicated. We have an opportunity to make something like that more simple, for everyone in business. This is the sort of thing we should be talking to the politicians about now and saying we want to see it changed.

We're at one of those moments in history where because of the economic crisis that we've just experienced and the fact that things are going to be very different going forward, we might be able to make a very significant change in something like that; and that's the sort of thing the institute is going to be asking for".

I fully agree wrt simplification. However, this is something that the ICAEW should have been calling for way back, not "going to be asking for"!

Bangladesh

Accountancy Age reports that a deal has been made between the ICAEW and the Institute of Chartered Accountants of Bangladesh (ICAB) wrt developing the profession.

"Both will look at examining requirements allowing members of one body to access the other."

I assume that any inter institute membership, if it occurs, will be structured in such a way as to ensure that the brand value of the ICAEW qualification will not be diluted.

In From The Cold

Ernst & Young will take ICAEW students again, having abandoned the ICAEW at the turn of the century in favour of ICAS.

However, Ernst & Young will continue to use ICAS.

Gerson Lehrman News

Off topic, I write articles covering business issues for Gerson Lehrman News, and am an Accounting & Financial Analysis Council Member (AFA Council Members include CFOs, former top regulatory body officials, partners from the world's leading accounting firms, academics, forensic accountants, and other financial executives).

The news articles can be accessed via this link Gerson Lehrman News.

Online Community

Accounting Web reports that the ICAEW is to launch a new online community for accounting students.

The site will offer information and guidance on relevant topics to support ACA and CFAB students, as well as containing a forum where members can swap tips and network. Membership will be open to all ACA or CFAB students, including those outside the UK.

Good idea, when will there be an online community for qualified members of the ICAEW?

Update: I stand corrected, it seems that there are some non student communities; evidently I have either been asleep for the past few months, or ICAEW did not publicise these very well.

The list of communities can be accessed via this link www.ion.icaew.com

Madden Leaves

Accountancy Age reports that Dr Raymond Madden, executive director for learning and professional development of the ICAEW, is leaving his post this week without warning.

His duties have been taken on by Mark Protherough, director of learning and professional development at the institute.

The sudden departure was, seemingly, unexpected.

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Diluting The Brand

A fellow member of the institute wrote to me today, voicing his fears over the dilution of the ICAEW brand wrt less demanding entry requirements for members of the profession who qualified in India and Pakistan.

"I recently discovered that ICAP(Pakistan) members just need to pass ICAEW 4 papers to become ICAEW members. Moreover ICAP members do not need to undergo any training with ICAEW ATO.

In past (until last wk) ICAP members needed to pass ICAEW 4 papers plus undergo 2 yrs training with ICAEW ATO to become ICAEW member, but now ICAP members do not need to undergo any training.

I do not know why ICAEW is giving its membership of other institutes members in this way. If ICAEW does not want other institute's members to undergo any training in ICAEW ATO (which is main strength of ICAEW), then I have to say merger with ACCA is a better option....

ICAEW has given more relaxation to ICAI(India) members."

Anyone from Moorgate care to comment?

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Wake Up!

Today (19 March 2009) I received an ICAEW Alert, on which was a link to Michael Izza's blog where he wrote a piece about HMRC customer service levels (dated Friday 13 March).

Here is an extract:

"Due to the Select Committee's timescales, the Tax Faculty is working to a very tight deadline and needs the survey completed by 9.30am Monday 16 March 2009."

Can you spot the problem here?

Yes, that's right, the deadline has long since passed!

Why alert us to a survey, that many memebrs of the ICAEW would have happily contributed to, after the deadline?

Elected To Serve?

I can appreciate that Tony Lomas has been a wee bit too busy recently to attend ICAEW Council (absent for six meetings in a row).

However, given that he evidently has other more pressing commitments, please could he explain why he wishes to remain on council?

The purpose of council, wrt the membership of the ICAEW, is what precisely?

See Accountancy Age for the background to this.

Brand Rules Out Merger

The Financial Director reports that ACCA CEO, Helen Brand, has all but ruled out the possibility of a merger with another industry body.

She is quoted:

"M & A activity has traditionally been seen to divert organisations from their strategy and take up lots of resources and time and effort."

Quite!

A Nice Little Earner

The ICAEW has fined members for the first time for failing to meet the requirements for continuing professional development.

Source Accountancy Age.

I recall, many many years ago, forgetting to pay my annual membership fee (mea culpa!) and (despite apologising profusely for my error) being charged approximately £400 by the ICAEW for the privilege of being "readmitted".

Suffice to say my membership fee is now paid by direct debit!