Ahead of the close of TPR’s consultation (on Wednesday 26 May) on a new single code of practice for pension schemes, Jay Solanki, Head of Governance at Premier, says TPR’s focus on governance and administration is overdue, but it’s unclear how much the new code will change practice on the ground.
“A new code of practice has been a long time coming. Some of the current codes have been in existence for 16 years so an update was urgently required. It is particularly good to see TPR investing so much energy into updating scheme governance and administration guidance. Understandably the focus in recent years has been on giving guidance on scheme funding but many recent problems have arisen through poor governance and administration and this needs to be addressed.
“It is fair to ask though how much impact a new code will have. There are few enforcement mechanisms and they depend on active scrutiny by TPR. Trustees should read and internalise the new guidance but many smaller schemes already struggle to get all their processes in order due to resourcing and/or costs: it could be years before they have time to fully digest the new code.
‘While the new code will cover all schemes, it will be more relevant for DB schemes as they are more vulnerable to things like misinterpretation of the rules, issues arising from the complexity of the benefit structure, lack of relevant data and poor administration. Most DB members would not be able to reconstruct their benefits and, therefore, rely on the trustees to get it right. The new, single code of practice should go some way to addressing these issues.”