Hi, I’m Louise from the policy team at The Pensions Regulator.
We’ve just published and begun consulting on our new code of practice for DC schemes, and schemes offering DC benefits, so I’m going to take you through some of the main changes, and let you know how you can get involved.
We published our first DC code in 2013 but we’ve now revised it to help trustee boards and managers of DC schemes to comply with the law, and to bring it up to date, particularly in light of the changes to the law that were brought in earlier this year.
Revising this code has been a good opportunity for us to make very clear what we expect of trustee boards and managers, and to continue to raise the overall standards of governance and administration in DC schemes.
During its development, we’ve engaged extensively with stakeholders, including the trustees, scheme managers and advisers that form the core audience for the code. This engagement has included comprehensive research, meetings, focus groups and workshops, and the discussions that arose from these have directly informed the revised drafting and the policies on which the code rests.
The code sets out the standards of conduct and practice we expect trustee boards to meet to comply with their legal duties.
The revised code is divided into six sections:
The first is the trustee board – including appointing a chair of trustees, member nominated trustees, and non-affiliated trustees.
Then scheme management skills – including managing risk, trustee knowledge and understanding, and conflicts of interest.
Administration – including core financial transactions and record-keeping.
Investment governance – including documenting investment matters, monitoring and reviewing investment strategies, and security and liquidity of assets.
Value for members – including value for money assessments and restrictions on costs and charges.
And communicating and reporting – which includes at-retirement communications, due diligence on transfers, and the annual chair’s statement.
The new code looks quite different to our first DC code. It’s much shorter and contains less detail. In particular, the new code assumes that trustee boards have a good level of knowledge about which laws they must comply with, so we’re not seeking to restate the law in the code. If trustees feel that they need more detail about what their obligations are, they may want to complete or revisit the Trustee toolkit.
Because of the new law that came into force in April, we plan to adjust our regulatory approach, particularly in terms of the voluntary governance statement that we have to date asked schemes to prepare. There’s more explanation about this in the consultation document.
We intend to consult separately on a series of guides to support the code in Spring next year. These guides will contain practical guidance that trustees can use to help them meet the standards in the code. As we consult to seek views on the new code, we also welcome your views in relation to whether the topics we propose to cover in the guides are the right ones, or if you think there are other issues we should address.
The consultation runs until the end of January. We value your thoughts and opinions and we want to hear from you, so please respond to the consultation and let us know what you think.