Pension Scheme ORA: Opportunity or Burden?

The Own Risk Assessment (ORA) is a fantastic chance to provide a snapshot of the governance in place at a specific time, but is it more than that? In our opinion, it is. With what we have developed at BW, the ORA heavily interlinks with (and indeed forms part of) the Effective System of Governance (ESOG) framework. 

What is an ORA and why it matters 

The ORA, as defined by The Pensions Regulator, is an assessment of how well governance systems are working, and the way potential risks are managed. In short, the ORA is asking:

• Do you understand your risks?
• Are you managing them effectively? 
• Is your governance system fit for purpose? 

Ultimately, the ORA should add value to your scheme by highlighting what is working, and what can be improved, within your governance processes.

Who must undertake an ORA?

The ORA is a requirement for occupational Defined Benefit (DB) and Defined Contribution (DC) schemes with 100 members or more. 

Do schemes under 100 members need an ORA?

There is no requirement for an ORA for schemes with under 100 members. We would suggest though that it is best practice to undertake an Own Risk Assessment, but to look at it in a proportionate and pragmatic way. 

Deadlines and timing for your first ORA

The ORA is due 12 months after the end of the first full scheme year starting after General Code publication. So, if a scheme year end is 31 March, then the first full scheme year would be 31 March 2025, which would make the ORA deadline 31 March 2026.

What your ORA must cover

The ORA will identify key risks facing the scheme. It is an assessment of the Effective System of Governance and how well everything is working in practice. Questions it can help answer include:

• Are there any major risks to the scheme? 
• Have you identified anything that will stop the scheme from meeting its short, medium, and long-term objectives? 
• Is there anything that will stop members being paid the correct benefits at the right time? 

The ORA should include how the governing body has assessed the effectiveness of each of the polices, processes, and procedures in place and why they are deemed effective.

The ORA should cover:

• Policies for the governing body
• Risk Management Policies
• Investment matters (and additional investment matters for DB schemes)
• Administration
• Payment of benefits (where applicable)

Indexing your ESOG evidence for the ORA

BW CORE seamlessly integrates your ESOG assessment, risk register, and governance calendar into one dynamic platform.

In one comprehensive system, it allows you to:

• Capture and rate your ESOG policies and processes.
• Track improvement actions.
• Maintain robust risk controls.
• Keep your governance calendar up to date.

With BW CORE, our consultants can generate instant reports on your current ESOG position, create summary dashboards for trustee meetings, and then seamlessly produce your ORA.

Common pitfalls when creating an ORA (and how to avoid them)

One common misconception is thinking that everything should be green or all risks should be completely mitigated when the ORA is complete. The assessment should be there as an honest appraisal of the current position. It is fine to identify red risks and risks which could impact the effective running of the scheme. The key aspect is that recommendations are made, actions are taken forward to mitigate and control these risks, and that a timeframe for completion is identified. 

How BW CORE streamlines producing, documenting and maintaining your ORA

By using BW CORE, you'll benefit from:

• Improved integration and oversight.
• Clear, timely reporting.
• Embedding of ESOG and risk management into your daily operations.
• Simplified ORA preparation.
• The ability to implement continuous improvements.

We have developed a clear ORA structure which is easy to follow, suitable for clients of all sizes, and can be tailored to suit the appropriate levels of detail required.

Talk to us about your Pension Scheme ORA (discovery call, workshop or BW CORE demo)

Please get in touch with:

• Luke Williams – Luke.Williams@Barnett-Waddingham.co.uk
• Barbara-Ann Thompson – Barbara-Ann.Thompson@Barnett-Waddingham.co.uk 

"BW CORE streamlines governance for pension schemes, integrating ESOG analysis, risk management, and ORA preparation into one efficient system. It empowers trustees to focus their time and resources more effectively, ensuring continuous improvement and compliance with the General Code."