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Role of the governing body

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

The governing body is responsible for running a scheme. Governing bodies may be trustees or managers of occupational pension schemes, or, in public service pension schemes, the scheme manager and the pension board. Legislation may apply to governing bodies differently depending on the type of scheme they govern.

The governance structure of public service pension schemes will need to take account of the differing responsibilities of the scheme manager, pension board and, where appropriate, pension committee. Pension boards must have an equal number of employer and member representatives.RO1

Those responsible for appointing members to the governing body need to do so using the principles of proportionality, fairness and transparency, while also considering the mix of skills and experience needed by the governing body. Learn more about recruitment in Recruiting to the governing body.

The law also requires that members of certain governing bodies are fit and proper to carry out their duties.RO2

In some cases, legislation may dictate how a governing body is made up, who can be a member and how members are appointed.RO3, RO4, RO5 Governing bodies remain accountable for any functions they delegate to a third party. Read more about appointing and managing relationships in Managing advisers and service providers.

Our expectations for how trustees of trust schemesRO6 should act can be found below. They also represent appropriate standards for governing bodies of other schemes.

Expected behaviours and standards

  • act honestly and with integrity, competence and capability, and financial probity, including in matters outside their role
  • meet their legal obligations and govern their scheme properly
  • act in the interests of the members and beneficiaries of the scheme
  • seek to ensure that all members of a scheme, whether deferred, active or in a pension or decumulation phase, benefit from good governance
  • be open and honest in their dealings with us
  • have, or be able to acquire, the appropriate levels of knowledge and understanding (see Working knowledge of pensions) and to keep these up to date (see Building and maintaining knowledge)
  • where acting in a professional capacity, members of governing bodies should be financially sound and not experiencing severe trading difficulties, and have indemnity insurance
  • identify and, where relevant, challenge others on any potential or actual failure to comply with the scheme rules, regulations and legislation (see Managing advisers and service providers).

Glossary and legal references


Active member

A person whose employment with the employer qualifies the member for benefits under the scheme and benefits continue to accrue.

Decumulation

Accumulation is where your pension grows (by contributions or investment return, for example). Decumulation is where you take money out of your pension to fund your retirement, for example, as a lump sum or by buying an annuity.

Deferred member

A person who has benefits under the scheme and is no longer an active member.

Pensioner member

A person who is currently receiving a pension from the scheme.

RO1 Section 5 of the Public Service Pensions Act 2013
[Article 5 of the Public Service Pensions Act (Northern Ireland) 2014]

RO2 Section 3(1) Pensions Act 1995
[Article 3(1) Pensions (Northern Ireland) Order 1995]

RO3 Section 29(1) Pensions Act 1995
[Article 29(1) Pensions (Northern Ireland) Order 1995]

RO4 Section 5(4) of the Public Service Pensions Act 2013
[Article 5(4) of the Public Service Pensions Act (Northern Ireland) 2014]

RO5 Sections 241 to 243 Pensions Act 2004
[Articles 218 to 220 Pensions (Northern Ireland) Order 2005]

RO6 Section 3(1) Pensions Act 1995
[Article 3(1) Pensions (Northern Ireland) Order 1995]