Regulator issues a consultation on revised internal controls guidance & e-learning modules on good scheme administration

4 December 2009

Summary

A key objective for the Pensions Regulator (“Regulator”) is promoting the good administration of work-based pension schemes. On 1 December 2009, the Regulator published revised internal controls guidance, for consultation; along with 'bite-sized' e-learning modules, which provide an overview of good occupational pension administration and governance.

Revised internal controls guidance consultation

Section 249A of the Pensions Act 2004 states that trustees of an occupational pension scheme must establish and operate adequate internal control mechanisms. “Internal controls” mean:

• arrangements and procedures to be followed in the administration and management of the scheme;
• systems and arrangements for monitoring that administration and management; and
• arrangements and procedures to be followed for the safe custody and security of the assets of the scheme.

The Regulator has already issued guidance covering the operation of internal controls. However, the Regulator is now seeking to develop this revised guidance in order to ensure that it will:

“… provide assistance with key governance areas like trustee knowledge and understanding, conflicts of interest, record keeping, employer covenant, and investment, … (and will) ... pay particular attention to trustees of smaller schemes where there is a recognised need for greater support.”

In order to ensure that the guidance will meet this criteria, it has been issued in draft form, as part of a consultation document. Once the consultation period has closed, the comments that the Regulator has received will be considered and the revised guidance formally issued for use by trustees. Click here to view the consultation. The draft revised guidance will replace the existing guidance and should be read in conjunction with the code of practice on internal controls. Responses to the 12 week consultation should be submitted by 1 March 2010.

E-learning modules

The Regulator has put together two short courses which will help trustees:

• think about how they tackle risk when running their own scheme,
• give them a flavour of the key principles and internal controls involved when managing risk and
• point them towards useful sources of information or guidance, in order to reinforce the key message in the code of practice: that trustees must have processes in place to identify and manage the most critical risks in their scheme.