Download the risk management report
Trustees of DB schemes continue to focus primarily on managing funding and covenant risks, whereas Trustees of DC schemes are concerned with ensuring that members are making the right choices at retirement.
For both types of schemes the risk of errors in the administration of the scheme is the second area of focus for Trustees.
78% of respondents confirmed that there is a formal assessment of governance in place and this is performed at least every three years. 70% of these respondents believe that their assessment of governance already covers the main elements of the Regulations. Therefore, when the new code of practice is issued by the Regulator, it should not have a significant impact on the majority of schemes.
It is unclear at present what the future code of practice will require from schemes in relation to key functions, namely the risk management function and the evaluation, adequacy and effectiveness of the system of governance. At present, only 53% of schemes have a specific party responsible for the evaluation, adequacy and effectiveness of the system of governance. We consider that this is currently covered by the Trustees but once the code of practice is issued, Trustees will need to consider how the requirements are covered and how this is documented.
There has been an increase to 73% from 50% of schemes that are using risk appetite and tolerance in analysing risks.
The success of pension
schemes in providing the best possible outcomes for members will be enhanced by
an effective Trustee Board.
This means that we need
to understand what skills, expertise, experience and personalities are on the
Trustee board, to enable us to provide you with constructive feedback so that
you can drive the scheme forward to meet its objectives.
We also need to understand
your structures and processes which support your decision making.
With the expanding
regulatory requirements on Trustees to take ownership of risk management of
their schemes, having good systems in place is vital to ensure compliance.
We help and support
Trustees by evaluating pension scheme governance arrangements, including risk
management, policies and practices.
This will lead to good
decision making and good member outcomes.
Our internal audit approach
is delivered through co-sourcing, outsourcing or a combination of these
pensions internal audit service provides assurance that appropriate policies,
procedures and controls are in place to mitigate key pension scheme risks as
part of good scheme governance and supports the latest ‘21st Century
Trusteeship’ initiative and Codes of Practice issued by the Pensions Regulator.
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