General Code of Practice:
LGPS implications

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The Pension Regulator's (TPR) General Code of Practice (the Code) – merging ten of its existing codes of practice into one (including the public service pension code) – is now in force. Below, Associate and Senior Pensions Consultant Gavin Paul recaps the Code, and provides reassurance to Local Government Pension Scheme (LGPS) funds that they should be meeting much of the Code already.

We can help you prepare your LGPS fund for General Code compliance through implementing our reverse gap analysis. Find out more.

Last updated: 22/04/2024

Summary

The goal of the General Code

TPR’s goal – to draft a code of practice wide enough to cover its expectations on the standard of governance across occupational, personal and public sector pension schemes – was an ambitious one. The goal has been largely achieved and the Code, despite being 171 pages long, is generally a well-structured and readable document, and should prove to be a helpful tool that funds can use to secure good governance, thereby lowering risks to the LGPS and its members.  

The structure of the General Code

The Code is a blend of legal obligations which already apply to pension schemes, TPR’s expectations on governance and best practice. It is split into modules which are grouped under the following headings: 

  • The Governing Body 

  • Funding and Investment  

  • Administration 

  • Communications and Disclosure  

  • Reporting to the Regulator 

Although split into modules, many overlap and funds should consider the requirements of the Code as a whole rather than module by module. It is worth noting that TPR expects pension schemes to choose their own approach to compliance based on the nature of their scheme. 

Just like the codes it replaced, the Code itself does not create new legal obligations and TPR has not been given power to enforce schemes to comply with it. Its primary purpose is to set TPR’s expectations for the conduct and practice of the governing bodies of schemes caught by the Code.  

With that said, the Code should not be ignored. Firstly, in many places, it is framed around legal obligations which funds must comply with and should already be doing so (e.g. financial transactions and dispute resolution). Secondly, where something goes wrong, a Court will take the Code into account where relevant. It is likely to take a dim view of an LGPS fund which has ignored the Code and that is part of the reason for a claim. 

 

Our General Code Hub

Looking for more info on the Code outside of its LGPS implications? You can find all of our up to date advice on our knowledge hub.

How does the General Code
apply to the LGPS?

Answering your questions

In not having a separate code for the public sector, TPR’s expectations around the governance of public sector schemes (including the LGPS) are scattered throughout the Code and it is not always easy to establish whether an expectation applies or not.

In its response to the consultation on the first draft of the Code (March 2021), TPR suggested it would make it clear which requirements applied to the public sector, but it declined to do so in the final version. This does mean that funds will need to spend time understanding what applies to them, and how it fits with existing public law requirements on governance, but at BW, we can help you with this.


How much work will implementing the General Code create for the LGPS?

Thankfully, not a lot in principle. We have read through the Code to understand how it applies to funds. Below, we set out our thoughts on how LGPS funds might wish to approach the Code, with the overriding message is that there is no need to panic.


Not all General Code requirements apply to the LGPS

To start with, not all modules / requirements apply to the LGPS. The Code was drafted with thousands of different schemes in mind, so it was inevitable that some may not apply. Examples include:  

  • the requirement to have an effective system of governance (or ESOG) is not a legal requirement for public sector schemes; 

  • an own risk assessment is not required; and 

  • other modules such as Funding and Investment do not directly apply to the LGPS.  


Funds should already be complying with most of the General Code

Funds should already be complying with the majority of the Code because it is framed around existing legal obligations which include matters ranging from dispute resolution to dealing with receipt of contributions to disclosure requirements.  

It is worth remembering that you may be complying with the legal requirement in a different (but equally valid or potentially compulsory) way than that set out in the Code, such as in relation to the appointment to and make up of governing bodies (pension committees). 


There is no need to comply with all the General Code on day one

We understand TPR does not expect funds to comply in full from day one so there is an opportunity for funds to prioritise the key areas of risk. Funds will also be aware that the long-awaited consultation on the Good Governance recommendations is expected in the summer of 2024 and should therefore be wary of updating any policies which cover the same areas as the Code.  

How can BW help?

Outlining our approach to helping you on your journey

Our process

We suggest funds prioritise as follows: 

  • Immediate action - Check the fund is meeting the legislative requirements (these are the “must“ requirements of the Code which are dotted throughout the document) 

  • At an early stage - Prioritise the remaining modules by their level of risk, according to the fund’s risk register 

  • Six months and beyond - Finally, look at the good practice areas in the Code. These are not compulsory for the LGPS – and can wait until the key requirements have been assessed. 

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Reverse gap analysis

It is a busy time for funds, with a number of competing priorities, and funds may find that they do not have the resources available to deal with the Code. That is where our experts come in, as we want to work with you in a way that takes the burden away from you. 

We believe that funds will already be complying with the majority of the Code’s requirements and that where funds lack, for example, a specific policy covering a Code requirement, there may well be policies operated by the administering authority which do the job.  

Also, there will be instances where the authority is required to comply but in a different way than that suggested by the Code. This will be particularly true of authorities which fall under local government legislation on the delegation of functions. 

Rather than asking funds to undertake a gap analysis for themselves and then be left to work out how to fill those gaps, we will do the legwork for you. We will look at all your policies and practices across the whole authority and find where you already comply, even when it is not obvious. Our default reaction to an apparent gap will be to look harder, not suggest potentially unnecessary work.  

We anticipate that by the time we have completed our work, the fund’s role in achieving compliance will be limited in both time and resource.   

Get in touch

If you would like to hear more about how we can help you on your General Code compliance journey, please get in touch with your usual BW contact, or email gavin.paul@barnett-waddingham.co.uk.