Client case study: Current-state assessment identified discrepancies in up to 33 % of pension reporting
A Swedish company with around 1000 employees wanted to ensure that its pension administration was working correctly and in line with current regulations. A current-state assessment was therefore carried out with FörsäkringsGirot to review reporting, pensionable pay and occupational pension administration.
The assessment revealed discrepancies across several pension arrangements and showed that some errors had arisen in reporting between payroll systems, pension administrators and insurance providers. In some cases, discrepancies were identified in up to 33 % of reporting.
Assessment results
✔ Discrepancies were identified across several pension arrangements
✔ Around 10 % of white-collar employees had discrepancies in their pensionable pay or insurance status
✔ Up to 33 % of Alternativ ITP contained discrepancies in the preliminary assessment
✔ Shortcomings in the reconciliation of pension reporting and invoicing were identified
Discrepancies were found across several of the company’s pension arrangements
A detailed analysis of the company’s data, reporting and administration identified several discrepancies between payroll systems, reporting to pension administrators and invoicing by insurance providers.
One of the key findings was that around 10 % of white-collar employees had discrepancies in their pensionable pay or insurance status, meaning that incorrect pension contributions may have been reported.
“The most valuable aspect was gaining an objective picture of the current situation. The assessment clearly showed where the problems were and gave us a concrete basis for deciding what we needed to prioritise going forward.”
– Project lead
A closer review of the different pension arrangements revealed further discrepancies:
- ITP 1: around 9 % of employees had discrepancies in their pensionable pay or insurance status
- ITP 2: around 16 % had discrepancies in their reported pensionable pay or insurance status
- SAF-LO: around 21 % of employees had discrepancies in invoicing or insurance status
- Alternativ ITP: the preliminary assessment identified discrepancies in up to 33 % of cases
Several of the discrepancies could be linked to how pensionable pay was calculated in the payroll system, where certain pay components were excluded from the calculation even though they should have been pensionable under the applicable regulations and policies.
Risks to both pensions and insurance cover
Incorrect reporting of pensionable pay can have several consequences.
For employees, this can mean that pension contributions are too low or too high. It can also affect sickness insurance benefits, as these are often based on pensionable pay.
For employers, errors can lead to financial discrepancies, retrospective corrections and administrative investigations.
“The current-state assessment showed us in black and white what was actually working – and what wasn’t.”
– Project lead
The assessment also showed that the company lacked a systematic check to ensure that reporting to pension administrators actually matched invoicing by insurance companies. This creates a risk that invoices are paid without full assurance that they reflect accurate pension reporting.
Complex administration behind many discrepancies
Several factors within the company’s organisation contributed to the complexity of its pension administration:
- multiple legal entities
- multiple collective agreements
- different pension arrangements
- different administrative processes
Overall, the assessment covered pension administration for several companies within the group and different collective agreement areas.
Pension administration is also an area that changes continually as regulations are updated and collective agreements change.
The result: better control over pension administration
Through the current-state assessment, FörsäkringsGirot was able to identify where and how discrepancies arose in the company’s processes and what action needed to be taken.
Recommendations included:
- clearer documentation of pensionable earnings
- regular reconciliations with Collectum and Fora
- clearer procedures for new pay codes
- improved monitoring of pension reporting
The assessment also highlighted the need to consolidate pension administration more systematically within the organisation to reduce reliance on individuals and improve monitoring.
An important insight for many employers
The overall conclusion from the assessment was that the company’s pension administration was fundamentally working, but minor discrepancies in its processes had, over time, created errors that would otherwise have been difficult to detect.
In FörsäkringsGirot’s experience, this is a common situation in many organisations where pension administration is handled across several different systems and by several different functions.
Would you also like to know the current state of your pension and insurance administration?
A current-state assessment gives you a clear picture of how pension administration works today and whether there are any risks or discrepancies to address.
You can calculate the risks in your occupational pension administration
Try FörsäkringsGirot’s calculator to get an estimate of what administrative errors could cost.
Get an answer straight away!