What can the UK learn from a year of Own Risk Assessments in Ireland?

Whilst the ORA (Own Risk Assessment) is a new requirement for pension schemes in the UK, we are not the first to need to navigate these waters - pension schemes in Ireland were required to complete their first ORAs by April 2024. We set out below key lessons learned from their experiences so far, and consider how these might be applied to UK ORAs to avoid early pitfalls, improve efficiency, and add real value to pension scheme risk management.

The pensions regulator in Ireland, the Pensions Authority, published its Code of Practice on 18 November 2021, which bears some resemblance to the UK's Pension Regulator's General Code of Practice which came into force on 28 March 2024. In particular, both Codes require pension schemes to complete an Own Risk Assessment or ORA to assess the effectiveness of their Effective System of Governance (ESOG).

Our team in Ireland has been supporting defined benefit and defined contribution scheme Trustee Boards with completion of their first ORA and were happy to share some valuable insights.

 
Our team noted first and foremost that the ORA process (the UK Regulator is keen to emphasise it should be thought of as a 'process' not a 'report') gives trustees a valuable opportunity to step back and review their risk management approach and schemes' other key activities, including spotting gaps and opportunities for process improvement and reflecting on the effectiveness of the management of key risks. And there's a mindset point here too: the ORA isn't a sign-off of a 'perfect' approach, but can and indeed should employ continuous improvement principles to identify and signal further improvement activity that will take place after the report itself is signed.

Further insights from our team in Ireland:

In summary

The ORA is a valuable process that can help trustees better understand the risks faced by their scheme and use this information to inform strategic decisions to deliver their long-term strategy. However, juggling the recent additional governance requirements from the General Code alongside business-as-usual scheme work, trustees might find it difficult to leave enough time to perform an effective review process, thus not gaining as much value from it as they might. To ensure trustees can gain value from the ORA, it is important to have the right procedures and tools which contribute to efficient processes and save valuable time. A streamlined process will help prevent duplication of efforts and free up time for Trustees to focus on the strategic aspect of this exercise.