Internal controls code of practice laid before Parliament

The Pensions Regulator's code of practice on internal controls has been laid before Parliament.

The code gives guidelines to trustees and managers of occupational pension schemes on how to meet legislative requirements, as well as outlining the regulator's expectations in relation to the assessment of risk, implementation and review of adequate internal controls.

A sound internal controls environment has always been a key feature of a well run pension scheme, ensuring better security and protection of members' benefits as well as demonstrating good scheme governance.

Article 14 (1) of the European Directive 2003/41/EC on the Activities and Supervision of Institutions for Occupational Retirement Provision now places an obligation on member states to ensure that pension schemes have adequate internal control mechanisms. The Occupational Pension Schemes (Internal Controls) Regulations 2005 bring the UK into line with this directive.

The Pensions Regulator head of policy and guidance Sue Rivas said: "Internal controls mitigate risks and help to ensure problems are detected at an early stage. The regulator recommends that trustees develop a risk management framework to assess the adequacy of internal controls."

To view the code of practice visit:
www.thepensionsregulator.gov.uk

1. The Occupational Pension Schemes (Internal Controls) Regulations 2005 bring the UK into line with Article 14(1) of the EU Directive 2003/41/EC. These regulations place an obligation on trustees and managers to have adequate internal controls and the code of practice provides guidelines on how they can comply with this legal obligation.
2. Internal controls are:
   • arrangements and procedures to be followed in the administration and management of the scheme;
   • systems and arrangements for monitoring that administration and management; and
   • arrangements and procedures to be followed for the safe custody and security of the assets of the scheme.
3. Codes of practice are not statements of the law. However, they do have evidential value. This means when determining whether legal requirements have been met, the code of practice will be taken into account by a court or tribunal where relevant.
4. The Pensions Regulator is the regulator of work-based pensions in the UK, with wide and flexible powers under the Pensions Act 2004.
5. The new powers of the Pensions Regulator include the ability to:
   • collect more detailed scheme information;
   • impose a statutory obligation on 'whistleblowers' to report suspected breaches of the legislation to the regulator;
   • issue improvement notices and third party notices, enabling the regulator to ensure problems are put right;
   • freeze a scheme that is at risk, while the regulator investigates; and
   • prohibit trustees who are judged not fit and proper to carry out their duties.

• Andrew Winstone 01273 627752
• Amy Balchin 01273 627207
• Out of hours 01273 648496
• amediarelations@thepensionsregulator.gov.uk
• http://www.thepensionsregulator.gov.uk/

Non-press enquiries:

Customer support 0870 6063636
customersupport@thepensionsregulator.gov.uk