2021 was a busy year for governance with the consultation and release of the draft Code of Practice, and the first wave of pension schemes being required to meet the TCFD governance requirements. The next 12 months promise to be an even busier time as we expect the draft Code of Practice to come into force in the summer and more schemes will need to adhere to TCFD. In this blog, we look at key governance priorities for pension schemes over 2022. 

Code of Practice

We expect TPR’s Code of Practice to come into force in summer 2022, following the consultation and release of the draft Code in 2021. In particular, the introduction of the own risk assessment (“ORA”) and ensuring an effective system of governance. Whilst further guidance is needed, particularly around the ORA, we expect schemes to be reviewing their current governance frameworks, comparing their current procedures to the draft Code, and identifying scheme-specific action areas. This is likely to be a significant piece of work, even for well-run schemes, and should be a key priority for trustee boards in the first half of 2022. 

TCFD

Governance is one of the four pillars of TCFD (along with strategy, risk management, and metrics and targets) – so it is no surprise this should be a priority item for trustees - in particular, for pension schemes with assets in the range £1bn to £5bn who need to comply with the TCFD governance requirements by 1 October 2022. An objective setting session can be a useful way to get stuck into this topic.

Board effectiveness

Given the other projects and priorities of trustee boards (for example, GMP equalisation, preparing for the DB funding code, and long-term strategy planning), as well as business as usual matters, time is precious. Therefore, ensuring your board and its approach to decision-making is effective should be a priority area. A trustee effectiveness review provides an interactive way to evaluate this and ensure no time is lost to ineffectiveness.

Priorities help us stay focussed on a goal. So whilst considering the above, make sure the actions you are taking are in line with your end goal – namely, your strategic and longer-term scheme objectives. 

Please get in touch with your usual Hymans Robertson Consultant if you would like to discuss any of these topics further.