The Pensions Regulator’s (TPR) new General Code of Practice officially comes into force today (27 March), in what is expected to mark a "significant moment" for UK pension schemes.

TPR published its long-awaited General Code of Practice, previously known as the Single Code, in January, with industry experts highlighting the new code as an "important step-up" in scheme governance.

Indeed, Sackers managing partner, Helen Ball, said the introduction of the new code marks the "starts the era of effective systems of governance and own risk assessments and is a significant moment for schemes".

However, she clarified that the code is a part of the "evolution of scheme governance rather than a revolution", pointing out that most of the contents reflects existing legal requirements and what was covered in the existing codes that have been replaced.

And, despite concerns about schemes' ability to meet the new requirements ahead of the March implementation date, industry research has suggested that the first wave of UK pension schemes are already well-aligned with the code.

In particular, WTW’s Code Assessment Tool (CAT), which allows schemes to assess their compliance against the code's requirements on a scale of 0-100, found that the average code alignment score stands at an "impressive" 87 per cent.

WTW highlighted this as evidence that most trustee boards will already be operating robust governance models that might only require fine tuning to align with the code, with a "notable" level of adherence across the board, as scores ranged from 72 per cent to 96 per cent.

"This data is a testament to the dedication of the trustees and managers of these schemes towards maintaining high standards of governance and should be reassuring to members involved and TPR," WTW head of governance consulting, Jenny Gibbons, said.

"While the majority exhibit commendable levels of compliance, there is always room for improvement, and improvement is always worth striving for."

Gibbons also argued that, while there is still a journey ahead, it's "encouraging to witness schemes embracing the significance of good governance".

"In some areas of course the name of the game is efficient compliance, but most recognise that in other areas there’s significant value for members in additional thoughtful focus on good governance and risk management," she added.

Previous research from Aon also showed that trustees were thinking about the new requirements, with 80 per cent of schemes expecting the trustee board or an existing sub-committee to carry out the role of risk management function.

Aon also polled the same pension schemes on the forms of assurance reporting on internal controls that they were likely to use, revealing that 69 per cent expect to rely on third party assurance reports, while 43 per cent expect to use internal audit, and 27 per cent expect to commission an external party to carry out an audit of their internal controls.

Commenting on these findings, Aon UK retirement partner, Sarah Butlin, stated: “It is encouraging that trustee boards have started thinking about how they will tackle these aspects of their risk management.

"A well-established risk framework and audit trail will be key to the effective system of governance and preparation of the Own Risk Assessment (ORA).”

This article first appeared on our sister website, Pensions Age.

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