LONDON, 6 September 2021 – Aon plc (NYSE: AON), a leading global professional services firm providing a broad range of risk, retirement and health solutions, has said that UK public sector pension schemes need to move ahead swiftly with the measures outlined in the new Code of Practice from the Pensions Regulator (TPR).
Almost a quarter of the responses to TPR’s Single Code consultation were from public service schemes (24 out of 103) but so far much of the attention has been on the code’s implications for the private sector. Nevertheless, given the size of the response, it is clear that public sector schemes are giving high priority to governance and to the new Single Code in particular.
Alison Murray, partner at Aon, said:
“While the date from which the code is effective has been put back to the summer of next year, that’s no reason for public service schemes to delay reviewing how they need to comply and then putting in the work to make it happen. 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. 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.
“We were aware that some areas of the code, such as the definition of the term ‘governing body,’ would need further work to clarify their meaning, particularly for the Local Government Pension Scheme (LGPS). Aon’s response to the 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.”
Alison Murray continued:
“Overall, the code includes some key areas that should be on the agenda of every public service pension scheme, particularly given the elevation from the existing TPR Guidance to Code. Notable among these is the emphasis on the importance of cyber risk management and the need for effective continuity planning as cyber threats emerge as a long-tail risk. We believe this is something that most schemes will be keen to review as we emerge from the COVID-19 pandemic. There will be new ways of working and any business continuity plan will need to reflect this changing environment.”
Mary Lambe, senior consultant at Aon, said:
“Governance has rightly been moving up the agenda for public service pension schemes in recent years. We are increasingly seeing the appointment of governance officers in the LGPS - which reflects just how important this area is becoming. This high profile for governance looks set to continue, with the Scheme Advisory Board’s Good Government recommendations hopefully being progressed in the coming months by the Ministry of Housing, Communities and Local Government.
“Alongside other emerging key governance considerations such as Inclusion and Diversity, this will have implications for officer, board and committee appointments as well as communications and other areas. Administering authorities should ensure governance areas are covered within their business plans and that they have the necessary budget and resources to deliver their objectives across all areas of the fund.”
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