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Codes of Governance for Defined Contribution Schemes
On 14 June 2016 the Pensions Authority published the third tranche of its codes of governance for defined contribution schemes. The codes of governance supplement the Authority’s Trustee Handbook and are intended to provide the trustees of defined contribution schemes with guidance on the minimum standards expected across a number of key areas of good practice. While these codes are not a statement of law, the Authority has indicated that it will use these codes to assess how the trustees of defined contribution schemes discharge their duties and obligations.
Although the codes of governance are specifically directed at trustees of defined contribution schemes, they do set out some general principles which may also be relevant to trustees of defined benefit schemes. The nine guidance notes that have been published thus far are on the following topics:
- Governance plan of action
- Trustee meetings
- Managing conflicts of interest
- Collection and remittance of contributions
- Investing scheme assets
- Paying benefits
- Keeping records
- Data protection (including template data protection policy)
- Risk management
In relation to the code on managing conflicts of interest, it is worth noting that the Authority appears to be taking the approach that there is a particular risk of a conflict arising where trustees are in possession of confidential information which they may not be in a position to share with the other trustees. This appears to go beyond the previous guidance published by the Pensions Authority in relation to conflicts of interest.
In the code on keeping records, the Authority sets out recommended practices for keeping track of deferred member’s details. This touches on an issue that is becoming more commonplace for trustees and, as such, its discussion in this guidance note is welcome.
The Authority has stated that it intends to publish further codes of governance for defined contribution schemes over the course of 2016.
This article was authored by Jane McKeever (pictured above), Associate in the Employment, Pensions and Benefits Group.