How LGPS funds should approach the General Code

Funds within the Local Government Pension Scheme (LGPS) should plan carefully for how to implement the new General Code, according to Hymans Robertson.

The code, which came into force on 28 March this year, has collated previous separate regulations into one document and introduced concepts such as the ‘effective system of governance’ and “own risk assessment” – although most schemes will likely be largely compliant already.

For LGPS funds, Hymans Robertson said officers responsible for LGPS funds needed to “provide clear evidence and maintain robust internal controls” to show the Pensions Regulator (TPR) that they are compliant with the code. Ongoing monitoring of compliance will be “vital”, the consultancy added.

Andrew McKerns, senior governance and administration consultant at Hymans Robertson, said funds “should be careful not to make knee-jerk changes”.

“Officers need to establish appropriate processes for their compliance requirements,” he said. “That way, officers can demonstrate a clear ‘before and after’ picture to their committee and board, and the methodology they used for any changes made.

“Focusing on preparation and planning will put funds in a better position to mitigate any issues, such as reputational damage, penalties or further scrutiny from TPR if non-compliant.

“To be successful in the long-run, funds will need to carry out a fair bit of work. Being thorough and methodical is how they will see the benefits.”

Hymans Robertson recommended a four-step process for ensuring compliance, beginning with training for officers, committees and pension boards to ensure everyone understands the requirements and implications of the new code.

Then funds can assess their current level of compliance, identify areas that need attention, and plan out how to address these.

The General Code has not introduced new legal obligations for any schemes and TPR does not have powers to enforce compliance. Instead, the document collates the regulator’s expectations of conduct and best practice across areas such as governance, funding, investment, administration, communications and reporting.