Appointment and role of the chair

General code in force: 28 March 2024

This module forms part of our expectations for trustees of those schemes required to operate an effective system of governance, see Systems of governance.

1. The governing body of an occupational pension scheme, and any committee, need to appoint a chair as good practice. The governing body of a relevant scheme¹ must appoint someone as chair, and for certain schemes, the role of chair will form part of its effective system of governance. See also Systems of governance.
2. The role of chair is an important one, and the appointment should be carried out within a robust and documented process. The members of the governing body remain responsible for running the scheme and are equally responsible for any decisions taken.
3. Where it exists, the legal duty to appoint a chair typically falls on the governing body, although the chair may be appointed by an employer. The governing body should review its scheme’s rules and other relevant scheme documents, which in the case of a corporate trustee, will include that company’s articles of association or constitution in order to check whether there is a scheme-defined process for appointing a chair.

Specific requirements for relevant schemes

4. The identity of the person appointed as chair must comply with the provisions of regulation 22 of the Scheme Administration Regulations². The chair has the extra responsibility of signing the annual chair’s statement³. See Chair’s statement.
5. A chair of trustees must be appointed within three months of a scheme being established or within three months of an existing chair resigning or being removed⁴. Trustee boards should treat the timescale permitted by law as a maximum and appoint a chair as quickly as possible. The governing body must inform us of the name of the chair⁵.

Expectations of a chair

6. We do not expect a higher standard of knowledge from the chair. As a matter of good practice, the chair needs to be able to demonstrate the skills and behaviours outlined below:
   1. Act as the leader of the governing body and demonstrate the standards of behaviour expected from other members of the board.
   2. Represent the interests of the scheme to all relevant parties, including employers, advisers, service providers, and members.
   3. Have an independent viewpoint when necessary and be able to manage potential conflicts (see Conflicts of interest).
   4. Be able to recognise each individual trustee’s potential, and ensure their knowledge and skills are used effectively (see Knowledge and understanding).
   5. Encourage members of the governing body to think strategically and take the broad, long-term view.
   6. Help achieve compromise and consensus between differing parties to achieve good member outcomes.
   7. Encourage participation from all members of the governing body, including new members.
   8. Be able to demonstrate elements of the following skills:
      • Communication with the governing body and its stakeholders.
      • Organising teaching, and training (sourcing if not delivering). See Governance of knowledge and understanding.
      • Debating, challenging, and negotiating.
      • Ability to gather and understand diverse views.
      • Managing conflicts of interest.

Glossary

Articles of association

The written rules about running the company agreed by the shareholders or guarantors, directors, and the company secretary.

Relevant schemes

Schemes defined by Regulation 1(2) of the Occupational Pensions Schemes (Scheme Administration Regulations) 1996.

Legal references

¹ Regulation 1 of the Occupational Pension Schemes (Scheme Administration) Regulations 1996 [Regulation 1 Occupational Pension Schemes (Scheme Administration) Regulations (Northern Ireland) 1997]

² Regulation 22(2) Occupational Pension Schemes (Scheme Administration) Regulations 1996 [Regulation 22(2) Occupational Pension Schemes (Scheme Administration) Regulations (Northern Ireland) 1997]

³ Regulation 23(1)(e) Occupational Pension Schemes (Scheme Administration) Regulations 1996[Regulation 23(1)(e) Occupational Pension Schemes (Scheme Administration) Regulations (Northern Ireland) 1997]

⁴ Regulation 22 Occupational Pension Schemes (Scheme Administration) Regulations 1996 [Regulation 22 Occupational Pension Schemes (Scheme Administration) Regulations (Northern Ireland) 1997]

⁵ Regulation 3(1)(da) Register of Occupational and Personal Pension Schemes Regulations 2005 [Regulation 3(1)(a) Register of Occupational and Personal Pension Schemes Regulations (Northern Ireland) 2005]