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Last month the Pensions Authority (Authority) published its Draft Code of Practice for Trustees of Occupational Pension Schemes and Trust Retirement Annuity Contracts (Trust RACs) (Draft Code) for consultation. As much of the EU (Occupational Pension Schemes) Regulations 2021 (Regulations) are concerned with scheme governance, it comes as no surprise that there is an entire chapter in the Draft Code dedicated to providing additional details on the Authority’s expectations when it comes to governance.

Trustee Meetings

The Draft Code provides trustees with a set of procedures for planning and running trustee meetings. It states that a trustee board must appoint a secretary, even where a secretary is not mentioned in the relevant scheme rules. The secretary’s duties should include circulating meeting agendas and papers as well as recording minutes. The Draft Code also sets out a meeting agenda with items that must be considered at every trustee meeting including conflicts of interest, risk, issues of non-compliance, administrative matters and member complaints. It also says that all trustee decisions, actions, reviews and policy determinations must be documented.

Documentation of Decisions and Reviews

The Draft Code states that trustee boards must document the following events:

  • Decisions taken (with reasons as to why they were made as well as advice received which informed the decision)

  • Actions taken

  • Policies implemented

  • Reviews undertaken

Trustee boards must review all policies once every three years as well as after any significant changes to the policy area.

Data Strategy

To manage their scheme’s financial and member data, the Draft Code states that trustees must have a written policy in place that sets out the methods and procedures used to implement their data strategy. The policy must also specify the procedures used in ensuring that data is securely stored as well as specifying who will have access to the data.

Conflicts of Interest

The Draft Code confirms that trustees must have a conflicts of interest policy in place. The policy must include:

  • A description of the types of conflicts likely to arise

  • A register of trustee and key function holder (KFH) interests that could give rise to a conflict

  • The process for managing conflicts and whether conflicted trustees will be allowed to vote on conflicted matters

Trustees must review compliance with the policy annually and the conflicts of interest policy itself must be reviewed every three years.


The requirement to have written contracts for outsourcing arrangements is included in the Regulations. This applies to activities that relate to a key function (risk management, internal audit, or actuarial functions), as well as the management of a scheme. The Draft Code provides that all outsourcing arrangements must be regulated by written contracts. Trustees must also notify the Authority four weeks before the appointment of any KFH becomes effective. The Draft Code then sets out a list of provisions for service provider contracts. Some of the areas covered are data protection procedures, business continuity arrangements, obligations of the trustees and the service provider as well as details of pricing and fee structures.


In line with the Regulations, the Draft Code states that schemes must have a written remuneration policy in place that covers trustees, KFHs, service providers and other professional personnel employed by the trustees. The remuneration policy must contain procedures for determining the remuneration for each of these categories. It must also contain safeguards to ensure that there is no excessive risk-taking as well as providing that remuneration is not based solely on financial performance. It also provides that the remuneration policy must be updated every three years.

Member Engagement

The Draft Code states that a written policy relating to member engagement must also be prepared by trustees. The policy must provide details of the objectives for member engagement, the frequency, and reasons for such engagement as well as the forms of communication that will be utilised. The policy must be reviewed at least every three years and updated to ensure that it serves the needs of the scheme members. If a member requests access to any scheme policy document they must be provided with access to it within four weeks of the request, unless there is a legal justification for withholding access.


The deadline for the end of the consultation period on the Draft Code is fast approaching. The extensive governance provisions in the Regulation and prescriptive nature of the related requirements in the Draft Code will not have been entirely unexpected. Most trustees have been aware for some time that the IORP II Directive would bring about sweeping changes to the pensions industry. However, where the Draft Code gives rise to concerns or confusion, stakeholders should ensure that they make a submission.

For more information on incorporating ESG factors as part of your scheme’s long-term investment strategy, contact a member of our Pensions team.

The content of this article is provided for information purposes only and does not constitute legal or other advice.

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