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The Pensions Regulator’s new general (formerly ‘Single’) code of practice (the ‘Code’) was published on 10 January 2024, 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.
The Code is designed to show pension schemes ‘how to approach governance and administration’, and to provide ‘consistent expectations’ across different types of pension scheme at the level TPR considers appropriate for ‘well-run schemes.’ The Code asks that schemes have in place an ‘effective system of governance, including internal controls’ (or ESOG), which they will then assess via an ‘Own Risk Assessment’ (the ORA – see below).
Trustees already had to establish and operate an ESOG. However, the Code sets out how trustees should discharge this duty. In practice, the ESOG will stem largely from the trustee’s governance policies and procedures, which need to meet statutory requirements as well as those in the Code.
A scheme’s ESOG should be proportionate to the complexity, scale and organisational structure of the scheme, and to the nature of the risks that the scheme is exposed to.
The ORA examines how well a scheme’s governance systems are working, and the way potential risks are managed.
Failure to complete an ORA may be considered an indicator of poor governance.
Mandatory for schemes with 100 members or more; good practice for others.
With some exceptions, within 12 months of the end of the first scheme year after the Code comes into force, and at least every three years after that. It should also be reviewed where elements of the ESOG or risk management processes are changed or updated, and whenever there is a material change in the risks facing the scheme.
The Code has an increased focus, among other changes, on:
We are aware that schemes will be at different points in their governance journeys, but most will need to undertake work, and are likely to need assistance along the way.
Now is the time to start taking action:
Let us help you take action now to ensure your scheme is compliant – now, and into the future. Speak to us about TLT's Governance Hub: our online self-service solution.
This publication is intended for general guidance and represents our understanding of the relevant law and practice as at January 2024. Specific advice should be sought for specific cases. For more information see our terms & conditions.
26 January 2024