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TPR General Code of Practice - great expectations for good governance

United Kingdom
10/01/2024
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The long anticipated General Code of Practice from The Pensions Regulator has been laid before Parliament today, with an expected go-live date of 27 March 2024.

The General Code replaces ten of the existing codes of practice (including those on DC governance, breach reporting, internal controls and trustee knowledge and understanding).

Much of the content of the General Code reflects existing requirements and expectations of TPR and many schemes will already be meeting these standards. An overarching theme is the requirement for schemes to have an effective system of governance (‘ESOG’) which brings together many key aspects of running a scheme, with a focus on risk management. Schemes will be expected to be able to demonstrate that they have appropriate procedures and policies in place. TPR describes the ESOG as ‘predominantly a rebadging of things that the governing body of a well-run schemes should be doing already’.

One substantial new requirement will be for schemes with 100 or more members to undertake an own risk assessment (‘ORA’). at least every three years, reviewing the effectiveness of their governance systems. The earliest schemes will be required to prepare and document their first ORA is within 12 months of the end of the first scheme year beginning after the General Code is issued. For example, assuming the General Code comes into effect on 27 March 2024 as planned, the first ORA for a scheme with year end 31 March 2024 would need to be produced by 31 March 2026 at the earliest.

There will be much work for trustees to do in familiarising themselves with the General Code and ensuring their scheme is compliant. The provisions are not always prescriptive, different approaches may be appropriate for different schemes and trustees can use their judgement as to what is a reasonable and suitable method of ensuring compliance for their scheme.  

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