The Pensions Regulator (TPR) has today published its General Code of Practice, previously known as the Single Code of Practice, which is expected to come into force on 27 March.
The General Code of Practice, which was laid in parliament today, aims to merge 10 of TPR’s existing codes of practice into a single new code of practice to set clear, consistent expectations on scheme governance and administration.
TPR said that the new format will make it easier for governing bodies to find TPR’s expectations and ask themselves whether, and how, they are meeting those expectations.
The new code sets out in detail what TPR expects of a scheme that is required to maintain an effective system of governance, bringing together many key aspects of running a scheme, not least in terms of risk management.
TPR added that it expects scheme governing bodies to be able to demonstrate that they have appropriate procedures and policies in place.
It added that the own risk assessment is a periodic review of the effectiveness of the features of the system of governance and will help the governing body focus on key areas in need of improvement in the governance and operation of their scheme.
TPR stressed that while the new code “looks different”, with expectations set out in short, focused modules, many of the standards set out are not.
The consultation on the single code ran from 17 March 2021 to 26 May 2021 and received more than 100 formal responses comprising around 17,400 separate answers.
The code was initially expected to be effective in the autumn of 2022, however, it was delayed due to political upheaval and the COVID-19 pandemic.
After being heard in parliament this morning, its laying period will last for 40 days and it is expected that the code will come into force on 27 March.
Louise Davey, TPR’s interim director of regulatory policy, analysis and advice, said: “Our new general code is an opportunity for governing bodies to make sure their schemes meet the standards of governance we expect, and savers deserve.
“It means there is no excuse for failing to know what TPR expects of them.”
Davey said that some governing bodies have already grasped this opportunity and carried out an analysis to ensure there are no gaps in their governance.
However, Davey believes many have not done so and risk falling short of the regulator’s expectations.
According to research from TPR, 40% of trustees of micro and small schemes were either unaware of TPR’s codes of practice or had never used them.
And, despite extensive industry engagement during the consultation on the new code, 23% of the trustees of these schemes were aware the new code was set to be introduced, with trustees of small and micro schemes the least likely to report being aware, just 19% and 9%, respectively.
Davey said: “Those that do not meet the code’s expectations should take action to improve their scheme’s governance.
“Trustees of schemes unable to meet our expectations should consider whether defined contribution savers would be better off in a larger, better-run scheme and whether defined benefit savers would see higher standards of governance in a consolidation arrangement.”
She said that “at the very least” governing bodies should be aware of where they fall short of TPR’s expectations and have clear and realistic plans in place to address those shortcomings.
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