‘Evolution, not revolution’: TPR’s General Code comes into effect
New requirements around governance processes and risk assessments have come into force as the Pensions Regulator’s (TPR) General Code goes live.
The code consolidates existing codes of practice into one document, as well as introducing some new requirements for pension schemes.
One of the biggest aspects of the new code is the introduction of the ‘own risk assessment’, a scheme-led review of risks that all trustee boards must prepare.
Clare Kember, trustee director and head of outsourced governance services at Independent Governance Group, said: “The outcome of this must be understood, and if necessary, actioned by the scheme’s governing body. It’s therefore important for schemes to consider whether they have the right skills within their governing bodies to carry out this responsibility, or if they need to upskill to ensure continued good governance.”
Helen Ball, managing partner at Sackers, said the introduction of the code was “a significant moment” for UK pension schemes.
However, it marked “part of the evolution of scheme governance rather than a revolution”, Ball added, as most elements of the new code were reflections of existing legal requirements.
She said: “The code provides schemes with a governance road map and makes the Pensions Regulator’s expectations clear, and as schemes begin to use the code, we are seeing that it is a helpful reference point for checking that they have all the governance measures in place that their scheme needs and that it helps with addressing the newer areas too.”
Effective system of governance
At the core of the new General Code is the ‘effective system of governance’. This brings together multiple aspects of running a pension scheme into one key governance overview.
Darren Gilberthorpe, director at Isio, likened it to a car manual, explaining that it encapsulated guidance on how to navigate potential risks, ensure compliance, and achieve scheme objectives.
“The General Code for trustees is not necessarily about making sure they know how to drive, but instead making sure they’re getting the right information to assess whether internal controls are working, and the right risk management framework is in place,” Gilberthorpe said.
“The own risk assessment serves as the scheme’s MOT, identifying potential faults and ensuring compliance in not only driving a vehicle that is fit for purpose, but driving one that is built to withstand any bumps in the road.”
Further reading
Pensions Expert’s columnists have been exploring aspects of the General Code over the last few weeks. Click the author’s name to catch up on their insights.
- Broadstone’s David Brooks takes a closer look at the own risk assessment – and why the code is important for your scheme even if you’re on the road to buyout.
- Rosanne Corbett from Muse Advisory explains how the code applies to small schemes, and how trustees can navigate the challenges they face.
- Charlotte Moss and Ellie Ludlam from Pinsent Masons explore the implications for cybersecurity and how trustees can address this evolving risk.