The long-awaited final version of The Pensions Regulator’s (TPR) new code of practice, the General Code of practice, replacing 10 codes of practice has been published. This 171-page document also sets out TPR’s expectations in relation to The Occupational Pension Schemes (Governance) (Amendment) Regulations 2018 and enhances existing guidance in some areas, including ESG, diversity, scheme continuity and cyber controls. 

Christine Kerr, Principal at BW, said: “Although somewhat later than expected, the industry is now able to digest the definitive General Code, which cements the move to make governance centre stage. We are delighted that some of the problems we highlighted with the first draft have been addressed." 

Points particularly worthy of note include the following: 

  • Those schemes with 100 or more scheme members are required to carry out and document an own risk assessment as part of the scheme’s Effective System of Governance (ESOG). It had been speculated that the Own Risk Assessment (ORA) requirements would be watered down from the original draft code in that the focus was to be the ESOG. The final code effectively links the two concepts.   
  •  The focus is now on the ESOG and ORA outputs working interactively; if significant changes or risks are identified then these need to be captured and recorded in both documents. It is clear that the ESOG is the area on which TPR wishes trustees to focus. 
  • Clarification has been provided in relation to remuneration policies: these should only cover costs for which the governing body is responsible. The requirement to make them available to members has also been removed.   
  • There is still only one version of the General Code, as opposed to one for public sector schemes and one for private sector schemes. TPR’s interim response said it would attempt to make the users for each particular module clearer, and it has added introductory paragraphs at the beginning of some of the modules explaining the type of schemes to which they apply.    

“The General Code of practice has been a mammoth task for TPR – the project had very ambitious aims and TPR’s interim response to the consultation noted that they had received around 17,400 responses to individual questions," added Christine. "It would be unrealistic to expect the new code to be perfect for all users in all areas, particularly in a fast-paced modern world where risks are continually evolving. While we would have liked to see different wording in some sections, overall it provides more clarity on how schemes can achieve better governance. 

“Trustees and pension managers now need to ensure they have the right resources, budgets and governance systems to comply with the General Code in a proportionate way. It needs to be enshrined within all they do to help them deliver their strategic goals.”

The General Code

The Pensions Regulator sets out its expectations in relation to both ESOGs and Own Risk Assessments (ORAs) in the General Code.

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General Code webinar

Watch our on-demand webinar which will help trustees on their journey towards compliance with the General Code.

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