By Charlotte Morrison, Actuarial Consultant at Hymans Robertson
Code of Practice
We expect TPR’s Code of Practice to come into force in summer 2022, following the consultation and release of the draft Code in 2021. In particular, the introduction of the own risk assessment (“ORA”) and ensuring an effective system of governance. Whilst further guidance is needed, particularly around the ORA, we expect schemes to be reviewing their current governance frameworks, comparing their current procedures to the draft Code, and identifying scheme-specific action areas. This is likely to be a significant piece of work, even for well-run schemes, and should be a key priority for trustee boards in the first half of 2022.
TCFD
Governance is one of the four pillars of TCFD (along with strategy, risk management, and metrics and targets) – so it is no surprise this should be a priority item for trustees - in particular, for pension schemes with assets in the range £1bn to £5bn who need to comply with the TCFD governance requirements by 1 October 2022. An objective setting session can be a useful way to get stuck into this topic.
Board effectiveness
Given the other projects and priorities of trustee boards (for example, GMP equalisation, preparing for the DB funding code, and long-term strategy planning), as well as business as usual matters, time is precious. Therefore, ensuring your board and its approach to decision-making is effective should be a priority area. A trustee effectiveness review provides an interactive way to evaluate this and ensure no time is lost to ineffectiveness.
Priorities help us stay focussed on a goal. So whilst considering the above, make sure the actions you are taking are in line with your end goal – namely, your strategic and longer-term scheme objectives.
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