A quarter of UK pension schemes have not yet completed a gap analysis of the General Code requirements or started to construct a plan of action to remedy their shortcomings, according to a survey by WTW.
The Pensions Regulator’s General Code was laid before parliament earlier this month and is expected to come into effect at the end of March.
The code brings together and updates 10 existing codes of practice into one set of clear and consistent expectations on scheme governance and administration.
WTW said that with the code due to come into force at the end of March, there is an immediate requirement to undertake a gap analysis to identify shortcomings and to create a plan of action to address them.
It added that a failure to do so, would lead to a pension scheme falling short of the regulator’s expectations and at risk of regulatory intervention.
Jenny Gibbons, WTW’s head of pensions governance, said: “For those who haven’t started yet, the publication of the code represents the firing of the starting gun. But the race before us is a marathon not a sprint, with runners making steady progress much more likely to achieve their goals.”
She added: “The General Code is ultimately about improving governance and risk management for the benefit of members.”
Other findings from the WTW poll looked at areas of focus, with 41% of schemes turning their attention first to completing policy and process documents, and 12% saying risk management was the first place to shine a spotlight.
The remainder intended to make progress in all areas or weren’t sure where to start, with just a handful turning first to aspects of board effectiveness and diversity.
Gibbons said that it is “very promising” that most schemes know where their key focus for the code requirements will be now.
She said: “It’s important to look at the direction in which the scheme is heading too. For example, if a scheme has already taken risk out of its funding and investment strategy, then the board may want to focus on those parts of the code that spell out a cyber risk management and preparedness approach.”
Gibbons also expects a change in the trustee board’s personnel, and a focus on board effectiveness or trustee recruitment policy.
“Each pension scheme’s situation and requirements will be different and these are the areas that a thorough gap analysis should identify,” she said.
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