The new code of practice will apply from 27 March
On 10 January 2024 the Pensions Regulator (TPR) announced that its long-awaited general code of practice had been laid in Parliament and is expected to come into force on 27 March 2024.
TPR also published the final response to its 2021 consultation on the new code, together with a copy of the code as laid in Parliament.
What is the general code?
The new code brings together and updates 10 of TPR’s existing codes of practice. More importantly, it sets out what trustees need to do in order to comply with the new legal requirement to establish and operate an effective system of governance, including internal controls, proportionate to the size, nature, scale and complexity of the activities of their scheme (ESOG).
Have any changes been made?
The consultation response says that TPR received over 100 formal responses to its consultation on the draft code, and confirms that the final version of the code includes a number of changes. For example, there are:
- changes to take account of feedback received in the consultation, including to clarify expectations and to improve structure and naming of modules;
- additions to take account of changes in the law since the draft code was published;
- changes to the Own Risk Assessment (ORA) module, including to allow “schemes to complete an ORA on their own timetable, and in part or in whole, provided it is carried out in its entirety at least every three years [and to] relax the point at which the first ORA needs to be published”;
- change to include more detail on the new requirement to have a risk management function;
- additions to encourage action on diversity and inclusion;
- changes (stronger wording) around professional trustee accreditation; and
- changes to the text and expectations around the new requirement to have a remuneration policy
The consultation response also confirms that the final, web-based, version of the code will include links to existing TPR guidance, links to other relevant guidance and details of relevant organisations and resources.
What have Open Trustees done in preparation for this
Like all pension trustees, Open Trustees will need to comply with the new ESOG requirement.
We have started to complete a detailed gap analysis to understand where our current policies and procedures meet the expectations in the code and where we need to take action. This work will need to be updated to take account of the changes that have been made.
It seems unlikely that TPR will expect schemes to be fully compliant on 27 March. However, it will expect all trustees to be taking action to understand where they are not compliant and putting a plan in place to address this.
How we can help
Alongside our colleagues at Osborne Clarke, we have built a simple to use, online solution, to help fellow trustees to complete an ESOG gap analysis and otherwise prepare for this new requirement.
Osborne Clarke are preparing a webinar which will cover the ESOG requirement in more detail and the changes made to the final version of the code. For more details you can sign up to the Osborne Clarke mailing list.