Aon is urging UK public sector pension schemes to adopt the measures outlined by the Pensions Regulator’s (TPR) new code of practice.
The code covers key areas every public service pension scheme should have high on its agenda, as the code will replace the existing guidance.
The code places particular emphasis on the importance of cyber risk management and the need for effective continuity planning as cyber threats have established themselves as very real and with a long tail.
“We believe this is something that most schemes will be keen to review as we emerge from the Covid-19 pandemic,” says Alison Murray, a partner at Aon.
“There will be new ways of working and any business continuity plan will need to reflect this changing environment.”
Although most of the attention has been applied to the impact of the code on the private sector, almost one quarter (24 out of 103) of the responses to TPR’s consultation on the code were from public service schemes. This suggests that public sector schemes are focused on governance and are considering the effect of the new single code.
The effective date of the code has been put back to summer 2022, but that should not be considered as an excuse for public service schemes to delay their review, says Murray.
“As a minimum, schemes should ensure they comply with the current code but we also strongly recommend that they start looking at the new areas in the code, both as best practice and to ensure they are ready for any new requirements that emerge next summer,” she says.
“Demonstrating compliance is also important, so they need to make sure they have a good audit trail or methodology for reporting to their local pension board or committee.”
Murray acknowledges that parts of the code require some work, such as clarification of the definition of the term “governing body”, particularly in the context of the Local Government Pension Scheme (LGPS).
“Our consultation focused on the need for clearer direction on who that body could be and whether in each module it applies to the scheme manager, the pension board, or in some cases, the pension committee. We would therefore welcome clarity from the TPR on this key point.”
Governance has received increased focus at public service pension schemes in recent years and the Scheme Advisory Board’s Good Governance recommendations look like being advanced by the Department for Levelling Up, Housing & Communities in the near future.