Pensions Regulator lays its new General Code before Parliament

On January 10, 2024, the Regulator confirmed that its long-awaited new General Code had been finalised and laid before Parliament. It should come into force on March 27, 2024. Schemes are required to have an effective system of governance (ESOG) in place, which includes developing a risk management function and a remuneration policy. Schemes with 100 or more members will also need to develop an own risk management (ORA) system, which will assess the effectiveness of the ESOG and aim to mitigate potential risks to the scheme.

The content of the finalised Code is largely the same as that in the original draft published in March 2021, with some keys changes as set out below:

• The timetable for schemes to produce the ORA is more flexible. Schemes will have at least 2 years from the time the Code comes into force to complete their first ORA. After that, the ORA will need to be completed every 3 years, instead of annually as proposed initially.
• The requirements relating to the trustees’ remuneration policy have been narrowed. The policy must now cover costs only for which the trustees are directly responsible, rather than including those scheme services paid for by the employer. The actual levels of remuneration do not need to be detailed and the policy will not be required to be published. This policy should be reviewed at least every 3 years, or following any significant changes.
• The Regulator has also adjusted its policy on unregulated investments to require governing bodies of trust-based pension schemes with 100 or more members to "invest mainly in regulated markets". The consultation draft had proposed that no more than a fifth of scheme investments should be held in assets not traded on regulated markets. The Regulator accepted that in setting this expectation, it had inadvertently created a position that could negatively impact on schemes that held such assets as part of a well-managed investment strategy.

For more information, please see our previous briefings linked below. These will be updated to include the changes outlined above.

Turning up the heat on compliance, July 2022.

Own risk assessments, August 2022.

Scheme policies and what to put in them, October 2022.