The General Code: How prepared are you?

With the end of 2023 fast approaching, it appears The Pensions Regulator (TPR) may finally publish its General Code (the Code), previously known as the Single Code of Practice. Consolidating 10 pre-existing codes of practice into one, it’s certainly been a long time in the works—the draft code featured in TPR’s March consultation way back in 2021. And much continues to be made about how trustees can best prepare for the changes, some of which relate to scheme governance.

Recap: What new governance responsibilities does the Code introduce? 

• Trustees and governing bodies need to establish and maintain an ‘effective system of governance’ (ESOG)
• This must be ‘proportionate to the size, nature, scale and complexity’ of their scheme’s activities
• Schemes with over 100 members must conduct an annual ‘own risk assessment’ (ORAs) to determine the effectiveness of their ESOG

How is SEI helping schemes?

We expect most, if not all, trustees will need to take some action to comply with the Code. Merely having a system of governance in place is not enough—the new ORA requirements mean the effectiveness of that system needs verification. How does a trustee prove their governance arrangements are fit for purpose? By conducting an assessment of the relevant policies and processes, documenting the results, and then plugging any gaps.

It may sound like an arduous task, but it doesn’t have to be. Breaking the ESOG down into its constituent parts is a good place to start, and on the ‘Funding and Investment’ section, we’ve got our clients covered. At present, we’re documenting how the schemes we work with meet the Regulator’s requirements—we’ll then use this to produce an ‘Investment ESOG’, which our clients will be able to use in evidencing the effectiveness of their investment provision. The framework will cover a number of areas, from investment governance, decision making and monitoring, through to stewardship and climate change. We hope to have it ready in Q1 2024, along with an ORA template—watch this space!

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