Important
Early draft of the code of practice
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Published: 17 March 2021
Governing bodies of occupational pension schemes need to have someone who fulfils the role of chair as a matter of best practice. Governing bodies of relevant schemesRL1 must appoint someone as chair, and for certain schemes the role of chair should form part of its effective system of governance. Learn more about effective systems of governance in Scheme governance.
The role of the chair is an important one and we expect the appointment of a chair to be set out in a robust and documented process. The members of a governing body remain responsible for running the scheme and are equally responsible for any decisions taken.
Where it exists, the legal duty to appoint a chair typically falls on the governing body. Governing bodies should review their scheme rules and other relevant scheme documents, which, in the case of a corporate trustee, includes the company’s articles of association or constitution, to check whether their scheme has a defined process for appointing a chair.
Specific requirements for relevant schemes
The identity of the chair must comply with the provisions of regulation 22 of the Scheme Administration Regulations.RL2 The additional responsibility the chair has is they must sign the annual chair’s statement.RL3 Learn more about the chair’s statement in Chair’s statement.
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 removed.RL4 We expect trustee boards to treat the timescale permitted in law as a maximum, and to appoint a chair of trustees as quickly as possible. The law requires governing bodies to inform us of the name of the chair.RL5
As a matter of best practice, the chair needs to demonstrate the skills and behaviours outlined below:
The role of the chair
- Act as the leader of the governing body and demonstrate the standards of behaviour expected from other members of the board.
- Represent the interests of the scheme to all relevant parties, including employers, advisers, service providers and members.
- Have an independent viewpoint when necessary, and be free from potential conflicts (see Conflicts of interest).
- Be able to recognise each individual trustee’s potential, and ensure their knowledge and skills are used effectively (see Working knowledge of pensions).
- Encourage members of the governing body to think strategically and take the broad, long-term view.
- Help achieve compromise and consensus between differing parties to achieve good member outcomes.
- Encourage participation from all members of a governing body, including new members.
- Be able to demonstrate elements of the following skills:
- communication with the governing body and its stakeholders
- organisation, teaching and training (sourcing if not delivering)
- debating, challenging and negotiating
- ability to gather and understand diverse views
- managing conflicts of interest.
Glossary and legal references
Articles of Association
The formal legal document which sets out the purpose of a company and the manner in which it will operate
RL1Regulation 1 of the Occupational Pension Schemes (Scheme Administration) Regulations 1996
[Regulation 1 Occupational Pension Schemes (Scheme Administration) Regulations (Northern Ireland) 1997]
RL2Regulation 22(2) Occupational Pension Schemes (Scheme Administration) Regulations 1996
[Regulation 22(2) Occupational Pension Schemes (Scheme Administration) Regulations (Northern Ireland) 1997]
RL3Regulation 23(1)(e) Occupational Pension Schemes (Scheme Administration) Regulations 1996
[Regulation 23(1)(e) Occupational Pension Schemes (Scheme Administration) Regulations (Northern Ireland) 1997]
RL4Regulation 22 Occupational Pension Schemes (Scheme Administration) Regulations 1996
[Regulation 22 Occupational Pension Schemes (Scheme Administration) Regulations (Northern Ireland) 1997]
RL5Regulation 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]