Willis Towers Watson has launched a new governance guide for trustees to help schemes navigate The Pensions Regulator’s new combined code.
This guide offers practical guidance on the steps pension schemes should take to make sure they are ready and compliant, as well as information and thoughts on wider features of good governance for schemes.
TPR’s new combined code is currently undergoing consultation and is expected to become law before the end of the year. It will cover defined benefit, defined contribution and public sector pension schemes.
Among the recommendations is that schemes could consider the appointment of an independent professional trustee (IPT) to help with the increasing complexity and risk involved in running a pension scheme.
The guide — Good Governance Guide for pension schemes — suggests that the experience and specialist knowledge held by IPTs can provide fresh insight and leadership for schemes. Indeed, recent research by Willis Towers Watson shows that nearly nine-in-10 schemes who have at least one IPT think that all schemes should employ one.
The guide breaks down good pensions governance requirements into five core areas:
- Better Governance, Better Outcomes: A reminder of this crucial premise and overview about the Pensions Regulator’s new combined Code and what this means for schemes.
- The right people in the right roles: An overview of how schemes can meet the new combined Code’s requirements, set out by the Pensions Regulator, including when allocating the Code’s new roles.
- Where am I now, where do I want to be? Exploration of the key actions trustees need to take to prepare for the introduction of the new Code.
- Governance to support your strategy: Practical suggestions on how to improve your outcomes further through your governance strategy
- An Inclusion and Diversity lens on decision making: Inclusion and Diversity is essential to both the success of the plan sponsor and their pension scheme.
Jenny Gibbons, governance lead for Willis Towers Watson’s Retirement business, says: “It is not surprising that The Pensions Regulator has focused in recent years on improving the governance of schemes”
She adds that 100 per cent of attendees at a recent webinar held with TPR agreeing that good governance leads to good outcomes.
She adds: “We believe that IPTs can have a big part to play in achieving successful scheme governance. The complexity and time required to run a scheme has increased significantly in recent years and professional trustees have the specialist knowledge and resources available to manage these challenges.
“In addition, tougher new TPR powers and a hardening insurance market have made it more difficult for others, such as member-nominated or employee appointed trustees, to manage or mitigate both the real and perceived risks attached to the role.”
Nick Gannon, policy lead for The Pensions Regulator, says: “Good governance is about maintaining control, oversight, asking probing questions, and making sure that all is behaving as it should. Without good governance, the wheels can come off a pension scheme very quickly.
“We welcome any initiative from the industry that helps trustees understand the expectations we have set, and the effort needed to achieve these goals, which will have a big impact on schemes’ success in the long run.”
Gannon adds: “TPR is pleased by the responses we have received to our consultation, which shows the industry is working to understand the new code before it comes into force. We will be responding to the consultation feedback in due course.”