Trustees should use the summer to get on top of new governance requirements that will come into force in the new Code of Practice in the autumn, LCP has urged.

Alongside the Pensions and Lifetime Savings Association (PLSA), LCP has produced a guide to help trustees navigate the new requirements and what they mean, the Own Risk Assessments Made Simpler Guide.

The Pensions Regulator’s (TPR) new code aims to improve governance and, while it’s largely based on existing Codes of Practice, it does introduce new requirements for both DB and DC schemes.

According to LCP, the most significant new requirement is for schemes with more than 100 members to undertake and document an own risk assessment (ORA), which is an examination of how well the effective system of governance is working and how any potential risks are being mitigated, which is what the new guidance focuses on.

TPR stated that producing the ORA could be a “substantial process” and many trustees may feel that this is yet another expectation at a time when there is already an increased regulatory burden.

The ORAs Made Simple Guide highlighted that the ORA should be seen as an opportunity for trustees to take a step back to think about how they operate, and can help to strengthen and streamline decision making and improve governance.

The ORA informs on a variety of topics such as pointing out that a proportionate approach is key and that, while TPR has the same expectations for each type of scheme, the systems and controls should be proportionate to its size, scale, nature, and complexity.

It is also pointed out in the ORA guide that trustees should consider governance risks holistically and consider a range of risks in relation to the management of activities, organisational structure, investment matters and communications and disclosure.

LCP partner and head of governance, Rachika Cooray, commented: “Trustees may feel overwhelmed with the new requirements and might not feel confident on where to start.

“Our guides on the ESOG and ORA help to simplify the requirements of the new code and we can help trustees to agree a plan to address the changes proportionately.

“There are practical steps that trustees can take now and we encourage trustees to use the summer to make progress with putting their ESOG into place so that there are in a good position to complete their first ORA next year.”

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