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Remuneration policy

Important

Early draft of the code of practice

This code is not in force yet. It is an early version for the new code of practice consultation.

To give us feedback on issues such as the design, usability and navigation of this code, email us at webfeedback@tpr.gov.uk.

You can also read more information about the consultation.

Published: 17 March 2021

This module applies to governing bodies of occupational pension schemes with more than 100 members, but not public service pension schemes or authorised master trust schemes. There are some other limited exceptions.RM1 Other schemes may wish to adopt these principles as good practice.

A remuneration policy sets out the levels and means for remunerating those undertaking activities in relation to the scheme paid for by the governing body and/or sponsoring employer.

Below are our expectations of remuneration policies for relevant governing bodies.

Remuneration policy

  • The governing body should establish a remuneration policy and keep a written record of it.
  • This policy should be proportionate to the size, scale, nature and complexity of scheme activities.
  • It should support the sound, prudent and effective management of the scheme and be aligned with the scheme’s long-term interests.
  • The remuneration policy should apply to all persons or corporate bodies who effectively run the scheme, those who carry out key functions or whose activities materially impact the scheme’s risk profile.
  • The policy should include measures to mitigate potential conflicts of interest and focus on ‘in-house’ roles, such as trustees, trustee secretary, administrators and subcommittees.
  • The policy should be reviewed at least every three years, but in most cases it will be appropriate to do so annually or immediately following any significant changes to the scheme’s governance arrangements.
  • The policy should include an explanation of the decision-making process for the levels of remuneration, and why these are considered to be appropriate.
  • The governing body should consider any outsourced service provider. These include, but are not limited to, administration, actuarial, legal advisory, and investment services.
  • The policy should be published on the scheme website or otherwise made available to scheme members.

Glossary and legal references

Chairperson

The person selected to take charge of the governing body in leading meetings and may often have the deciding vote on scheme matters, for DC schemes the chairperson is also required to sign the annual chair’s statement

Risk profile

Includes consideration of the scheme’s membership demographics, funding, asset allocation and sponsor covenant (where applicable)

RM1Section 249A (3) Pensions Act 2004
[Article 226A (3) Pensions (Northern Ireland) Order 2005]