On the go: Many trustees are not fully aware of the requirements of the Pensions Regulator’s new code of practice, a survey by Barnett Waddingham has found.
Ahead of a webinar introducing the new code of practice to trustees, the consultancy surveyed 165 trustees and found 63 per cent thought the changes required to comply with the new code would be significant for their scheme, versus 21 per cent who thought the changes would not be significant, and 16 per cent who did not know what the changes were.
Following the webinar, which looked at how the code will impact trustees and schemes, 86 per cent believed their scheme would need to make significant changes to be compliant — a swing of 23 per cent.
Furthermore, half of those surveyed have not reviewed their scheme’s exposures to environmental, social and governance risks, despite TPR’s increased focus on ESG factors in investment strategies.
This leaves the industry questioning whether there has been enough clear guidance, and whether trustees truly understand what is about to hit them, said Barnett Waddingham.
The survey also found that roughly six in seven of those questioned plan to look into the topic in the next 12 months, but around one in seven have no plans to consider this at present.
When the regulator’s new code of practice is finalised, most schemes will only have one year to meet what many believe to be their biggest governance challenge for 15 years.
For example, any scheme with at least 100 members will be legally required to produce an own-risk assessment, something TPR acknowledged will be a “substantial” process.
As reported by Pensions Expert in March, part of the reason behind the inclusion of these new duties is the need to incorporate “effective system of governance” requirements mandated by the EU’s Institutions for Occupational Retirement Provision II directive, the most onerous being the need for pension schemes with more than 100 members to carry out an “own-risk assessment” each year.
Sara Cook, principal and senior pension management consultant at Barnett Waddingham, said: “Governance can be a word that switches people off, but this is all really about risk management and ultimately better member outcomes.
“What remains to be seen is how proportionate schemes are allowed to be. The volume of what the regulator seems to be asking schemes to do could frustrate their ability to focus resources on the highest risk and strategic issues that really make the difference.”
She added: “Trustees should be setting aside some agenda time now to start considering how the code impacts their existing processes and risk management framework. For some, that might be additional planning and resources with the right skills to ensure they comply with the final code.”
