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The Pensions Regulator’s new general (formerly ‘Single’) code of practice (the ‘Code’) was published on 10 January, and is expected to come into force with effect from 27 March 2024. Moving to a ‘more modern, flexible and user-friendly design’, TPR has converted the content of 10 (of its 15) existing codes into a series of interlinked online modules. Those codes not yet included will be updated and integrated in due course.
The Code is designed to show schemes ‘how to approach governance and administration’, and to provide ‘consistent expectations’ across different types of scheme at the level TPR considers appropriate for ‘well-run schemes.’
Elements of the Code apply to different types and sizes of schemes, and so not all requirements are relevant to SSASs and SIPPs. In this update, we summarise some key considerations for SSAS trustees and SIPP operators.
Legislation requires that occupational pension schemes have an ‘effective system of governance’ (or ESOG) in place. Certain types of scheme are exempt from this requirement; SSASs however are not – and so must have an ESOG. The Code sets out how trustees should discharge this duty.
Importantly, a scheme’s ESOG should be proportionate to the size, complexity, scale and organisational structure of the scheme, and to the nature of the risks that the scheme is exposed to. This proportionality principle, together with exemptions for SSASs from some legal requirements that apply to larger occupational pension schemes, means that not all elements of the Code will be relevant to SSASs.
SIPPs, as personal pension schemes, are not required to have an ESOG, but specific parts of the Code do apply to them – see further detail below.
With this in mind, what internal controls and areas of governance should SSASs be prioritising? Every scheme is different, of course, but some key areas to ensure your policies and procedures are up to scratch in include:
These can often be areas where we see SSASs facing difficulties (and even ending up in front of the Pensions Ombudsman or TPR), with many particularly relevant to the nature of a SSAS. Speak to us for further detail on these and other requirements.
Professional trustees should provide guidance to their SSAS clients to ensure they comply with the legal requirements and, where applicable, the Regulator’s expectations as set out in the Code.
TPR has expressed a particular concern that many small schemes risk falling short of its expectations, with 40% of micro and small schemes having last year reported that they were either unaware of the codes of practice or had never used them.
This should be seen as an excellent opportunity to reflect, organise and improve governance and mitigate key risks across your book of SSASs:
There is no obligation for SIPPs to have an ESOG, but of course, operating to good governance standards is highly recommended. Operators of SIPPs should ensure they are aware of the specific areas of TPR’s codes that apply to them (eg in relation to contributions, communications, and whistleblowing), understand where these sit in the new General Code layout, and note any changes of emphasis.
Let us help you take action now to ensure your SSAS and SIPP schemes are compliant – now, and into the future. Our specialists can help with a compliance ‘gap’ analysis, drafting and updating policy documents, and training on both the new Code and trustee requirements generally.
See our SIPP and SSAS Hub for more information on how we can help you, plus for links to our SIPP & SSAS briefings, which feature many of the above governance issues.
This publication is intended for general guidance and represents our understanding of the relevant law and practice as at February 2024. Specific advice should be sought for specific cases. For more information see our terms & conditions.
12 February 2024