Code of practice 07
Trustee knowledge and understanding (TKU)
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Introduction
- Codes of practice are issued by the Pensions Regulator, the body that regulates work-based pension arrangements (occupational pension schemes and certain aspects of stakeholder and other personal pensions). The Pensions Regulator is required by section 90(2)(f) of the Pensions Act 2004 to issue this code.
- The Pensions Regulator's statutory objectives are to protect the benefits of pension scheme members, to reduce the risk of calls on the Pension Protection Fund, and to promote the good administration of work-based pension schemes.
- The Pensions Regulator has a number of regulatory tools, including issuing codes of practice, to enable it to meet its objectives. The Pensions Regulator will target its resources on those areas where members' benefits are at greatest risk.
- Codes of practice provide practical guidelines on the requirements of pensions legislation and set out the standards of conduct and practice expected of those who must meet these requirements. The intention is that the standards set out in the code are consistent with how a well-run pension scheme would choose to meet its legal obligations.
The status of codes of practice
- Codes of practice are not statements of the law and there is no penalty for failing to comply with them. Nevertheless, codes have legal effect; they must be taken into account by the regulator, a court or tribunal, if they are relevant to what is being decided.
- Consequently, whilst any alternative approach to that which appears in the code will need to meet the underlying legal requirements, it is not necessary for all the provisions of a code of practice to be followed in every circumstance.
- This is one of a number of codes of practice issued by the Pensions Regulator. The purpose of this code is to provide practical guidelines on what knowledge and understanding is required by trustees under the legislation, and to set out the scheme documents with which trustees are required to be conversant.
Other relevant codes
- This code sets out the requirement for trustees to have knowledge and understanding of those matters included in the Scope Guidance. That Scope Guidance includes all the codes of practice and guidance issued by the regulator. All codes of practice are therefore relevant. Several codes also specifically make clear that trustees are expected to have knowledge and understanding in the particular area in question.
Northern Ireland
In this code of practice, references to the law that applies in Great Britain should be taken to include corresponding legislation in Northern Ireland. The appendix in this code lists the corresponding references.
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