As the famous song goes “Schools out for Summer!”
During the school holidays, there is often a parallel break in our working lives as colleagues with families take time out to enjoy a summer holiday with their nearest and dearest. However, the work of a trustee is never done!
If you find the pressure is easing off a little during the school summer holidays, you can use this time to get ahead of the game. With that in mind, here are a few pointers that may be of help:
New Codes Of Practice
The Pensions Regulator’s (TPR) new code of practice aims to improve governance and has introduced new requirements for both Defined Benefit (DB) and Defined Contribution (DC) schemes. Yes, they’re mostly based on existing Codes of Practice, but it’s still worth getting your trustee house in order for the forthcoming changes.
ORAs are a new process
In a bid to increase standards and understanding around governance and risk management, trustee boards are now tasked with carrying out their Own Risk Assessments (ORAs) for those schemes with 100+ members. It requires trustees to ‘annually evaluate how effectively the board is performing,’ which means thinking about whether you have an Effective System of Governance (ESOG) in place – forgive the acronyms but remember you can’t have an ORA without an ESOG, and TPR has acknowledged this could be a significant piece of work… particularly for those schemes that do not have relevant processes already in place.
Assuming you are confident you do have an effective system of governance, it’s time to think about your own risk assessment. This must be carried out annually and although the first ORA may be quite daunting, assuming you do get it right, subsequent iterations should become a lot easier.
Remember, this shouldn’t simply be a tick box exercise – it’s a useful opportunity to really think and reflect on your governing body and how it operates. The ORA is intended to apply to all types of schemes:
- DB;
- DC; and
- Hybrids.
TPR intends the ORA to sit separately to the risk register and integrated risk management monitoring processes, although in reality, there will be some commonality in topics between the ORA and other risk management processes.
We have been assisting numerous trustee boards with the process already and our advice is to think of the ORA as a process for evaluating the management of risk in the short, medium and long-term as well as considering operational, reputational and financial risk.
Dashboard Dash
Another piece of work for summer is around trustee obligations when it comes to the new pension dashboards. TPR suggests that affected schemes have yet to start digitising their data – obviously, the success of the dashboards will rely on accurate electronic data – and TPR will take a dim view of trustees who ‘carelessly fail to prioritise their dashboard responsibilities’.
How confident are you that your data is up to date, accurate and in the correct format for the dashboards? When you consider it could take anything between 12 to 18 months to prepare, you can see why this needs to be a priority. Trustees should be aware of when their scheme needs to connect to dashboards, how they work and how they will provide members with relevant information. You should hear from TPR about a year before your scheme is due to connect, however, as this is a major job – it needs your attention now.
If you would like support and information on how your trustee board should be future proofing its systems, do get in touch for an informal chat about how our experts can help prep for future changes… We’re here all summer!
With over 40 years’ experience in trusteeship, 20-20 Trustees is an award-winning professional independent trustee organisation, committed to making a difference in the world of pensions. Whatever your trustee requirement, we can help. Get in contact today!