24 July 2009
The Pensions Regulator (“Regulator”) has issued a second edition of the code of practice (“code”) on Trustee Knowledge and Understanding (“TKU”) along with guidance on the scope of the TKU regime. The revised code and guidance has not significantly changed since the first edition of the code and guide. It applies to virtually all individual and corporate occupational schemes (including stakeholder pension schemes set up under trust).
A significant change in the revised code is the way in which it considers the requirements of trustees of small defined contribution schemes with 12-99 members. The Regulator has responded to requests to diminish the applicable guidance for this group. The Regulator has also continued the exemption of schemes with 12 members or less, from following the obligations under the code.
The revised code is still in “draft” format since it is subject to parliamentary scrutiny. However, it is doubtful whether any changes will be made to it in parliament. There is no date by which the code is to come into force; but a date later this year is likely. All Regulator codes of practice are not statements of the law and failure to follow them is not punished by a specific penalty. On the other hand, codes do have legal effect; they must be taken into account by the Regulator if they are relevant to what is being decided.
Prior to being laid before parliament, the revised code was subject to a short consultation. The National Association of Pension Funds summed up the general tone of what many trustees felt about the proposed code:
“The feedback we have had from NAPF members on the review indicates very strongly that the pensions’ community regards the proposed revisions as being helpful and appropriate."
To read the full text of the code of practice click here
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