More than eight in 10 pension trustees in the UK believe they will need to make significant changes to comply with the Pensions Regulator's (TPR) new code of practice once it is finalised.
That is according to new research by Barnett Waddingham, which also found evidence to suggest that many pension trustees do not truly understand what is about to hit them.
The researchers surveyed trustees prior to a webinar on the new code of practice, finding that 63% thought the changes would be significant for their scheme, with 21% saying they would not be, and 16% unsure.
However, following the presentation, 86% believed their scheme would need to make significant changes to be compliant – a swing of 23%.
Barnett Waddingham said that the findings suggest that the industry may not have been give enough guidance on the new code, which many believe might be their biggest governance challenge for 15 years.
“Governance can be a word that switches people off, but this is all really about risk management and ultimately better member outcomes,” said Sara Cook, senior pension management consultant at Barnett Waddingham. “What remains to be seen is how proportionate schemes are allowed to be.
“The volume of what the regulator seems to be asking schemes to do could frustrate their ability to focus resource on the highest risk and strategic issues that really make the difference.”
TPR opened a consultation on the new code in March, which will bring 15 existing codes of practice together as one.
It will also require any scheme with at least 100 members to produce an own-risk assessment (ORA) – something TPR acknowledges will be a “substantial” process.
Barnett Waddingham's survey found that 43% of respondents anticipate advisers will lead this project, compared to 33% who believe it will be the trustee board.
Despite TPR’s increased focus on ESG factors in investment strategies, 50% of those surveyed had not reviewed their scheme’s exposure to these risks, although roughly six in seven of those plan to look into it over the next 12 months.
“Trustees should be setting aside some agenda time now to start considering how the code impacts their existing processes and risk management framework,” Cook continued. “For some that might be additional planning and resource with the right skills to ensure they comply with the final code.”
Image credit: ESB Professional / Shutterstock
Author: Chris Seekings