UK Pensions: The Pension Regulator’s General Code

19 January 2024

At some 31 months since the consultation closed in May 2021, The Pension Regulator’s (TPR) new General Code has finally been delivered.

After having been through several cycles of preparation and disappointment awaiting its arrival, we are pleased to see the Code come into effect.

When does The Pension Regulator’s General Code come into effect?

The Code will come into effect on 27th March and TPR stated expectation is that by then, schemes will at least have a plan to comply. 

Even though a lot of effort has gone into trimming the final version and making it easy to use, it will still represent a step up in governance for many schemes.

Times are tight and increasing requirements generally result in increased work and costs.

ZEDRA’s response to this conundrum is a significant investment in technology to transform the governance platform used to operate our sole trustee clients and comprehensive support for schemes who need additional input to get their governance framework in place.

Effective System of Governance (ESOG)

Schemes will be in a variety of places with their preparations for their proportionate ‘Effective System of Governance’ (ESOG).

Those with good existing governance arrangements will be able to check off their policies and procedures against the revised Code, add in any new requirements and fill in any remaining gaps.

Others, who have not advanced so far, may find it more time and cost effective to start again and establish a new ESOG from scratch, putting in fresh policies and procedures tailored to TPR’s expectations.

It is the old dilemma of when it makes sense to replace your old model with a shiny new one rather than continuing to add on to something beginning to creak at the edges.  Key considerations in this decision are ease (and therefore cost) of operation and ability to use technology to help.

Sparkling new policies are the start but most of the ongoing work is in the procedures needed to follow them.  We have found it helpful to consider both policies and procedures together in arriving at a practical and proportional ESOG to make sure the ESOG is easy to follow in practice.

Own Risk Assessment (ORA)

A final observation might be in respect of ‘ORA’. Although this is now a three-yearly exercise and most schemes’ first ORA will be in 2026, a little thought on the ORA as you are implementing your ESOG will make it a much smoother and easier process when you come to complete it.

The idea is that you adjust your ESOG based on findings from your ORA, not that you adjust the ESOG in order to be able to complete it in the first place.

How ZEDRA can help

Strong governance protects and improves member outcomes and we are supportive of the steps taken to protect members.

The Code has arrived and now is the time to plan out your ESOG, whether that be by updating or replacing existing arrangements. ZEDRA can support you through gap analysis, providing policy suites and implementing a proportionate ESOG.

The Regulator makes clear in the press release accompanying the Code that the only other acceptable option is for Schemes to consolidate or wind up and leave the field to someone else.

Contact Mark Stopard to find out more.

Related Insights

How Can We Help You?