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Pension scheme governance and the new Singular Code

Many pension schemes will already have implemented appropriately robust governance mechanisms, however, the introduction of the new Singular Code will require trustees to review and enhance traditional processes. For example, the new written policies in key areas such as:

Although many Trustee Boards will have some of these mechanisms in place, the arrangements may not be formally written anywhere. There will also be many business’ pension schemes that are yet to put these in place, so they need to start thinking about implementation.

What does The Pension Regulator’s new Singular Code mean in practice?

The Regulator’s Combined Code was published for consultation in early 2021. The Combined Code is expected to become effective in late 2022 which means it’s important to review your pension scheme with urgent effect.

When the code takes effect, schemes with more than 100 members will be required to follow it. And, although the code has not yet been published in its final form, it will require schemes to consider their ‘Effective System of Governance’ (ESOG) and conduct their ‘Own Risk Assessment’ (ORA) on an annual basis. Further details around pension scheme regulation can be found here.

What is an Effective System of Governance?

To understand what an ESOG is, let’s take a look at the legislation. That takes us back to the Statutory Instrument (SI) that sets out what the Code of Practice must cover:

What is an Own Risk Assessment?

The Combined Code is expected to introduce the requirement for the trustees to complete an ORA within 12 months of the code being published. The ORA must then be updated on an annual basis, and this is the area where trustees are going to need to ensure that they are preparing as early as possible.

Even if the Combined Code is subject to correction as a result of the consultation responses, the underlying legislation is quite clear in the requirements for the ORA:

Where is your pension scheme on its governance journey?

Step 1. Training for schemes

Step 2. Gap analysis

Step 3. Gap analysis complete – what next?

How can RSM help?

Across our various service lines, our skilled team of pension consultants and governance professionals have extensive experience of:

Our pension advisory services are in place to help our clients achieve compliance with the 2018 Governance Regulations and feel assured that the business is meeting the guidelines necessary.

For more information on pension scheme governance, please get in touch with a member of our team.

authors:philip-briggs,authors:jed-turnbull