The Pensions Regulator's consolidated code of practice – a marathon, not a sprint

The 2021 London marathon took place at the weekend. What a fantastic event - well worth the two year wait.

The decision to run a marathon is not one anyone takes lightly - you need to decide well in advance of the race that you are going to run. The pre-race work and effort is crucial to getting you over the finish line.

Although The Pensions Regulator’s (TPR) new consolidated code of practice might not have been the topic foremost on the marathon runners’ minds on Sunday, compliance with the new code is definitely more of a marathon than a sprint for pension scheme trustees and pension managers (but don’t expect a medal at the end if you comply!)

Like successful runners, trustees need to start their groundwork well in advance. If they are to be well prepared for the code coming into force, that work needs to start now.

The new code will bring together 10 of TPR’s 15 current codes of practice into 51 new modules. It is aimed at providing governing bodies in the pensions industry, along with professional services providers, with a clearer, more accessible single online code. TPR refers to it as an “up-to-date and consistent source of information on scheme governance and management”.

TPR has broken down the themes from its existing codes to form shorter, topic-focused modules, which will link to related topics within the new code and, in time, to guidance and external sources. Some additional new topics have also been included. Once the new code comes into force, the codes being replaced will be revoked in their entirety.

Trustees should get training on the new code now. Get familiar with how the code has been set out, what it contains and what the requirements are likely to be in the finalised version. TPR has published an interim response to the consultation and so we know the likely direction of certain aspects.

Think about carrying out a gap analysis of current policies and procedures so you are clear on what you already have in place. You can’t be sure that your polices and procedures will comply with the new code until it is finalised, but by carrying out a review now, it will provide you with a good start. For schemes with good governance already in place, a lot of your existing processes and procedures should be able to be reviewed and adapted to fit the new requirements.

Think about the new requirements we know are definitely coming into force. The majority of schemes are going to have to carry out an ‘Own Risk Assessment’ (ORA) which will assess how well the effective system of governance is working, and how well potential risks are being managed. It is anticipated that schemes will have 12 months to carry out their first ORA, which will then be required at least annually thereafter. This will be a major piece of work and needs to be scheduled into your work plan for 2022.

Other new requirements such as establishing a risk management function and a remuneration policy are also highly likely to be included in the final version of the code. Prepare for these now so that you are in a good position when the code comes into force (expected summer 2022).

We are running free training for trustee boards on the requirements of the new code. Take the first steps in preparing for the code by organising a session for your trustee board. Contact us for more details.

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