LONDON, February 2, 2024 – Following the publication of the Pensions Regulator’s General Code on 10th January, polling by WTW has revealed that three quarters of defined benefit (DB) pension schemes have completed a gap analysis of the General Code requirements and started work to construct a plan of action to remedy their shortcomings.
The General Code, which has now been laid before Parliament, brings together and updates 10 existing codes of practice into one set of clear and consistent expectations on scheme governance and administration. With the Code expected to come into force from 27th March, there is an immediate requirement to undertake a gap analysis to identify shortcomings and to create a plan of action to address them. Failure to do so, would lead to a pension scheme falling short of the Regulator’s expectations, and at risk of Regulatory intervention.
“For those who haven’t started yet, the publication of the Code represents the firing of the starting gun. But the race before us is a marathon not a sprint, with runners making steady progress much more likely to achieve their goals.”
Jenny Gibbons | Head of Pensions Governance, WTW
Jenny Gibbons, WTW’s Head of Pensions Governance, said: “For those who haven’t started yet, the publication of the Code represents the firing of the starting gun. But the race before us is a marathon not a sprint, with runners making steady progress much more likely to achieve their goals. The General Code is ultimately about improving governance and risk management for the benefit of members.
Other findings from the WTW poll looked at areas of focus, with 41% of schemes turning their attention first to completing policy and process documents, and 12% saying risk management was the first place to shine a spotlight. The majority of the remainder intended to make progress in all areas or weren’t sure where to start, with just a handful turning first to aspects of board effectiveness and diversity.
“It’s very promising that most schemes know where their key focus for the Code requirements will be now,” said Gibbons. “It’s important to look at the direction in which the scheme is heading too. For example, if a scheme has already taken risk out of its funding and investment strategy, then the Board may want to focus on those parts of the Code that spell out a cyber risk management and preparedness approach.
“Similarly, if there is likely to be an upcoming change in the Trustee Board’s personnel, then the scheme may want to focus on Board Effectiveness or Trustee recruitment policy.
“Each pension scheme’s situation and requirements will be different and these are the areas that a thorough gap analysis should identify.”
WTW surveyed 217 Pension Scheme Trustees on 19th January 2024 as part of a webinar it hosted entitled ‘Cracking the Code – What will TPR’s General Code mean for my scheme?’
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