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Managing pension governance and risks effectively

Risk management report 2019

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We are delighted to present our third edition of our risk management survey, which follows on from our previous surveys, and also considers the implementation of IORP II for UK pension schemes.

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The highlights

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.

of schemes have a remuneration policy for Trustees and, where there is a policy place, only 14% of respondents have never reviewed the policy.  

There has been an increase to 73% from 50% of schemes that are using risk appetite and tolerance in analysing risks. 

   1 in 4 schemes do not have a plan in place to respond to a cybercrime breach.
Only 33% of schemes have received cybercrime scenario-based training. 

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How Crowe can help 

Trustee effectiveness

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.

Risk assessment

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.

Internal audit/assurance

Our internal audit approach is delivered through co-sourcing, outsourcing or a combination of these approaches.

Our 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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