The Pensions Regulator has launched a consultation on its new code of practice, setting out how schemes should demonstrate an effective system of governance.
This move has been welcomed by the industry, with Mercer saying it will positively impact trustees by supporting better decision making and helping to improve member outcomes.
Mercer says it encourages schemes to consider the proposed ‘Own Risk Assessment’ (ORA), to ensure governing bodies can assess the effectiveness of their governance structures across key areas crucial for delivering members’ benefits.
Mercer, partner and UK trustee leader Tess Page says: “We believe that integrating the principles of the proposed new code in scheme governance and in particular the introduction of the ORA will be a crucial tool to support modern scheme governance and make a real difference for members, trustees and their sponsors.
“We know from our experience that schemes that place a real focus on effective governance make better-informed and timely decisions, which can reduce costs and deliver improvements in funding levels. Nevermore so has this been evident than in the midst of a global pandemic where some schemes were able to ride the challenges of the last 12 months and see the opportunities, where others have struggled. We are now actively working with clients to start considering their ORA – the sooner they do so the sooner they can reap the benefits.”
The remainder of the proposed code of practice is largely a consolidation and simplification of a number of existing codes of practice aiming to remove duplication and conflicting requirements. The TPR consultation document was published on 17 March 2021 and the closing date for responses is 26 May 2021.
Mercer has developed its own independent ORA approach called Forensic Integrated Risk Management. This provides schemes with an objective evaluation of their governance structure across 12 key areas crucial to delivering members’ benefits and security.
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