Industry experts have welcomed The Pensions Regulator’s (TPR) consultation on the Single Code of Practice, although concerns have emerged over the level of clarity as to what requirements have been changed, with some calling for a longer consultation period.

The Pensions and Lifetime Savings Association (PLSA) thanked TPR for its engagement with the industry, highlighting "high levels of support" for the Single Code of Practice amongst its members, with 72 per cent supportive, and just 2 per cent opposed.

However, PLSA director of policy and advocacy, Nigel Peaple, also clarified that, from a practical standpoint, there could be greater clarity as to where TPR has made changes to requirements, or added new ones.

“This will help achieve higher levels of compliance and reduce the administrative burden on schemes, something of particular value to smaller schemes,” he stated.

Association of Consulting Actuaries (ACA) chair, Patrick Bloomfield, echoed this, warning that the code does not have a clear indication of which requirements are new, which are simply 'consolidation' or which existing requirements have been removed.

He continued: "This approach has made it difficult to be sure we have identified all of the potentially significant changes incorporated into the draft code.

“A good example of a significant and potentially problematic new requirement that we did identify is that no more than a fifth of scheme investments are to be held in assets not traded on regulated markets (on page 65 of the consultation document) which we comment on in our response.

“The detailed list of items to include in an “Own Risk Assessment” look onerous and may raise serious governance concerns for smaller schemes that are above the 100 member threshold at which the requirement will fall away.”

Considering this, the ACA has “strongly recommended” that TPR highlight the specific changes being made to requirements in future, also stating that a consultation document “of this magnitude” should allow for a three-month consultation period.

Society of Pension Professionals legislation committee chair, Mark Bondi, agreed, stating: “The Single Code is a complex and significant undertaking for TPR. Yet the timescale given to the industry to review the full draft has been insufficient.

"As a result, we fear the resulting code risks being flawed and costly to implement, undermining its value.

“We suggest TPR focuses this year on bringing in the new code areas in an improved way, together with accompanying guidance such as for the IORP II regulations, so it is fit for the range of schemes the expectations will apply to.

“The additional work to update existing codes and guidance can follow in a more manageable way later, with increased guidance in the meantime for areas of greater regulatory focus such as the Implementation Statement and statement of investment principles (SIP).”

Concerns have also been raised over the need for further clarity more broadly, as the ACA called on TPR to clarify whether trustees can delegate IT and cybersecurity requirements to third-party providers, or if they are required to carry out their own tests.

In addition to this, the ACA argued that the existing guides for defined contribution (DC) should be retained as the current framework is “working well”, raising concerns about transition from Code of Practice 13.

It also highlighted concerns about where new requirements are onerous or duplicate disclosures that already need to be made elsewhere, particularly in relation to the Implementation Statement, which it said appears to introduce new requirements.

Alongside this, the PLSA warned that the application of the code to the Local Government Pension Scheme (LGPS) is "often not clear", calling on TPR to provide additional guidance and support to funds on this issue.

Peaple added: "One of the other key areas of concern across our membership is the introduction of new phrasing that interprets the legal requirement to invest predominantly in regulated markets to be 80 per cent.

“There is nothing in statute that requires this allocation and many of our member pension schemes regard it as arbitrary. Many defined benefit (DB) schemes already invest beyond a 20 per cent holding of illiquid assets, in line with generally accepted principles of pension funding.

“Limiting investment in the way proposed would also make it harder to achieve other government policy objectives related to responsible investing, climate change and infrastructure.”

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