Scheme Sessions Volume 1.2022 - Governance: What's New?

Jason Coates: Good afternoon everyone. I think we have just clicked into afternoon and a very warm welcome, thank you for joining us for the first of our scheme sessions volume 1 2022 webinars. We are delighted to have Louise Scivyer to TPR and Sarah Horan of ITS with us today and I will be introducing them a little more in a moment.

First of all just a few pieces of housekeeping. This is the first, as I say, webinar in a series of three webinars. Our theme is governance for the three webinars. We will be looking at what is new today with Sarah and Louise and then on 2^nd February we will be having a look at a particular topic and that is transfers, transfer scams and the new regulations and I am delighted that we will be joined by Margaret Snowden for that one and then the week later on 9^th February we will be wrapping up with a back to basics on governance and Charlotte Scholes from Gowling and Nicholas Hill from Outer Temple Chambers will be talking to us about some of the basics around trustee decisions, decision making minutes and how trustees can protect themselves best in that way.

So we have got three really interesting webinars for you over the next few weeks. We will be following basically the same format for each of them and today we will be running until just before 1 pm. We will have a short introductory presentation from each of Louise and Sarah to give us an introduction, in particular today we are thinking about the Single Code and diversity and inclusion and how that fits in with scheme governance, and then we will be opening up to questions from all of you. You will see that you have a Q&A box on your screens and you will be able to submit questions through that. Please feel free to submit them at any time through the webinar and we will do our very best to pick up as many of those as we can and to cover your specific questions.

Also just to flag as ever there is a feedback form as well which we would be very grateful for your feedback, that will all sort of pop up at the end of the webinar, we are always really interested to hear your feedback and including on any topics you would like us to cover when we get to scheme sessions volume 2 which we will be doing in the summer.

So with no further ado I will just introduce a little of our two speakers who, as I am sure you will agree, are expertly placed to talk to us today about governance and what is new. So Louise Scivyer is the current Head of Policy at The Pensions Regulator, joined The Pensions Regulator in 2007 and has been working on a number of policy and operational items since then and before TPR Louise spent 12 years working in the pensions industry in a number of other roles.

Sarah Horan joins us from ITS, the professional trustee company and Sarah has a wealth of experience in the pensions industry, some of which is as a consultant with Mercer and KPMG and also some great experience from looking after pensions schemes and being involved in pension schemes, for example the £11billion Co-op scheme where Sara was the secretary to the trustee.

So we have got a fabulous couple of speakers and panellists today who are going to be talking to us, as I say, about the Single Code, what we can expect from that and the Regulator and Sarah will be picking up particularly on how we can integrate diversity and inclusion into scheme governance.

So Louise maybe I can therefore handover to you to kick us off. Thanks very much for being with us.

Louise Scivyer: Thanks very much Jason and thank you for inviting me to speak this afternoon. Good afternoon everybody. So I am going to give you a bit of a run through of the single modular Code and a bit of a recap of how it came to be and what kind of next steps are and some of the kind of specific new areas that are covered in the Code. So if we could move on to the first slide please.

So just a little bit of a reminder first about the kind of purpose of The Pension Regulator Codes of Practice. So obviously the way that The Pensions Regulator is set up it means that, you know, we have our legislative framework that is set by the DWP and we operate within that. So our Codes of Practice are not statements of the law unless in very certain circumstances the legislation actually says that a Code of Practice must be in place and referred to, but generally our Codes of Practice set out the expectations that we have for the conduct of practice of people who are required to meet the requirements that are set in the legislation.

So there is no specific penalty for failing to follow a Code of Practice or to meet the expectations set out in it, but it is important to note that we do rely on Codes on Practice in legal proceedings as evidence that a requirement has not been met in the legislation. So in those situations a court can take them into account and similarly if we find grounds that we need to issue a compliance notice for any reason, we might refer back to the Code of Practice in terms of wording around the expectation that we are setting in that compliance notice. So that is just a little bit of background to kind of set, you know, what the purpose of Codes of Practice are and what their status is. So if we could move on to the next slide please.

So why have we decided to introduce a Single Code? Well, it stemmed from the Occupational Pension Scheme Governance Regulations in 2018 that actually included a requirement for us to draft new Code expectations in relation to effective systems in governance and when we looked at our current Codes we found that actually a lot of the issues that we would need to provide expectations on were kind of touched on but they were out of date and across different Codes they were kind of duplicated and potentially there were some inconsistencies there as well, for example in terms of what we might expect from DB schemes, ET schemes and public service schemes.

So we took the opportunity really to clarify what our existing expectations are and kind of rationalise and modernise the way that we communicate those expectations through this new web-based Single Code of Practice.

So we had, or we still do at the moment, have 15 existing Codes of Practice which will be drawn into the new online Code and so there will be, or the user of the Code it will all be in one place providing a consistent source of information on scheme governance and management. The table on this slide shows the existing Codes that are at the moment being brought in to the Single Code, so there are some areas that will, for now, remain in separate Codes, for example the authorisation and supervision of master trusts and the DB funding Code although that will, when we have the new Code published, that will be brought into the same format as the Single Code.

So we have consulted on the draft content for the first phase of the new Code of Practice, so as I say, bringing ten of our current 15 Codes together and we are now in the process of going through the consultation responses and making appropriate changes before finalising the Code and laying it in Parliament and we expect that to happen in late spring/early summer, that that Code will be laid in Parliament.

So the new Code of Practice what it does, it essentially separates content into five areas, so they are listed there on the screen, I will not go through them, but within those five areas there is a total of 51 shorter modules that draw together the content from those ten of our existing Codes as well as the new expectations that are required by the governance regulations that I referred to earlier.

One really important thing to note is that this new Code is designed to be a web-based product. We are really trying to encourage people away from the printing of material for example, and the purpose of the structure of this new Code is that it can be really easily navigated online, that … all the slides are jumping around a little bit, I think we need to go forward one more, there we are … yes so they can be navigated really easily online, it should be really easy to find the specific content that you are looking for and the headings are nice and clear and you can easily jump to different bits of the Code. The reason we have done this is that we know from feedback that people value ease of use and in particular a really efficient search system so that is what we have really focused on for this new product, and user testing will, of course, be taking place to ensure that it meets needs so we have consulted on the content of the draft Code for this but actually there is an accessible version of the web-based Code on our website which is still available there for people to go and have a look at, or have a play around with and you can still provide feedback to us on issues around the actual web design and the usability of it, even though the consultation on the content has closed, so that can be found on our website and feedback can be given by the email address that is on the screen there. Can … forward.

So this slide here which I am not going to kind of go through in detail but illustrates really what is new and what is actually existing content in the Code of Practice so some areas are new and those are ones that have been brought about by the new governance regulations. There are some things that appear as being new for particular types of schemes but in actual fact they have been existing for other schemes in a Code of Practice for some time, so for example the role of the governing body so that was covered in some detail in our DC Code of Practice that we issued in 2016, but there was not a kind of equivalent for DB although actually in practice there is not any discernible difference between the expectations we have, they just had not been codified across all schemes. So that table there just kind of illustrates and if you are interested then on the consultation page on our website there is a document there that shows the actual origin of different bits of the Code of Practice so you can see where bits of the new Code have come from in relation to the Codes that were existing before.

And I am conscious that I have mentioned a number of times there this term governing body and that is a new term that has been introduced in this Code of Practice and it is intended to capture the relevant terms across public service schemes and private occupational schemes as well so rather than talking about trustees and scheme managers where we have got expectations that apply across the board, we are referring to the governing body so that it is clear that that applies, it is a fairly generic, easily understood term in terms of everyday language that actually that is who that expectation applies to. If we could move forward?

So effective systems of governance, so this was the kind of the new requirement brought in by the governance regulations before we had requirements around adequate internal controls for example, and having adequate systems of governance but this key term, effective systems of governance, actually is a little bit of a game changer because it now means that it is not really just about making sure you have got the right documents down, that you have got the right controls recorded and identified, this is about checking that what is in place is actually effective and is actually working as is intended to work. So this is what the new requirement is and it applies to most occupational schemes, it is for schemes with more than 100 members to have and operate an effective system of governance. And there are various processes and procedures that an effective governance system should have to make sure that it is compliant and we have included an index in the Single Code pointing to all of the different areas that need to be complied with in order to meet the effective system of governance requirements and that is shown in this table on the slide. I believe these slides will be made available to people after the event so that you can refer back to this, but actually this information is all on our website within the Single Code consultation page as well. If we could move forward.

And the other new requirement that the governance regulations introduce is the introduction of the own risk assessment. So this is really a regular process requiring the governing body to assess the effectiveness and the risks of their system of governance so the two link together. There are some requirements around the timing of the preparation of the first own risk assessment and then each subsequent risk assessment should be carried out and documented within 12 months of the last one and reviewed whenever there is a material change in any of the risks to the scheme or to its governance process. So this is designed to be a kind of ongoing process for trustees and we have created a module that acts as an index for the elements that we expect the ORA to consider in the same way that we have for effective system of governance. So this is a new requirement and yes it is one that I am aware there will probably be several questions on today, so I will not give too much away at this stage, I will save those for the questions or for the answers.

So that was it from me at this stage so I will hand back to Jason I think.

Jason: Great thanks Louise, that was an excellent intro to the Single Code and the ORA, yes I am sure there will be lots of Codes on the ORA in particular as you say. OK, so before questions, if we move on to Sarah please to talk a little bit about diversity and inclusion and how we bring that into play in the trustee world.

Sarah Horan: Thanks Jason. So I am going to spend a few minutes reflecting on diversity and inclusion and in particular focusing on the practical steps that trustees can take.

So what do we mean by diversity and inclusion in the context of pension schemes? Well there are two aspects; how our schemes can best meet the needs of a diverse membership and how we can improve decision making on trustee boards by increasing diversity and inclusion. In considering diversity we often focus on three characteristics: gender, age and ethnicity, but diversity can cover a broad spectrum including religion, beliefs, sexual orientation, economic and educational background, physical and cognitive differences. I have worked in the pensions industry all my career and attended many trustee meetings where I am the only female in the room and whilst this happens perhaps less frequently now than at the start of my career, it still occurs and it is a situation not to be recognised by many. And other representative groups will have similar experiences.

So I am going to focus on two aspects and identify some practical steps which you can take to broaden the diversity and improve the inclusivity of your board. Firstly what steps can you take to make your board more diverse? Well it is good practice for trustee boards to identify their skills gap as part of the selection process for new trustees and as an extension of this process trustees can also assess the diversity of their board and consider how they may increase this diversity. We then need to consider how to attract interest in the trustee role from a broad spectrum of candidates, whether for employer, member nominated or independent trustee roles. It is important to debunk any myths by explaining in simple terms what the trustee role is and what it is not. Some schemes approach this by offering basic training as part of the pre-selection process or by encouraging potential candidates to speak informally to current trustees, to hear first-hand what the trustee role entails.

Recognising a wide range of motivations which different potential trustees may have can help highlight the benefits of the role for candidates what is in it for me, and historically we have generally viewed the motivation to be a trustee to be altruistic but the reasons why someone wants to be a trustee can be very varied and for example those in the early stages of their career may be attracted by the career development opportunities, such as gaining experience of working on a board and raising their profile.

Where the scheme sponsor is further advanced in developing its corporate D&I policy trustees can often learn from that experience, such as how best to communicate and engage with the workforce. We have seen trustee clients who have worked with their sponsor to overhaul their communications through a D&I lens significantly increase the trustee candidates from a much more diverse background than had previously been the case.

And finally as part of the selection process for new trustees we need to reassure potential candidates that training and support will continue to be provided throughout their term. A structured induction programme is a good start and gives the basic foundations. This can include completing the Regulators toolkit and one to one discussions with key personnel involved in managing the scheme, such as advisers, the chair, the scheme secretary. A buddy system where a new trustee is partnered with a more experienced trustee can provide informal support. This can give a new trustee a safe space in which to raise what they might be worried is a daft question and most likely be reassured that the question is not daft at all.

Training plans, keeping training logs and regular reflection on training needs, perhaps with the support from the chair of trustees can help individual trustees focus their development. New trustees need this guidance as it is hard for them to identify what they do not know and the issues most relevant for their scheme. The aim of all of these ideas is to ensure that new trustees are equipped and confident to fully engage with the trustee board's activity whatever their background. And that leads us on to the next slide where we will consider how to build an inclusive environment on the board which enhances effective decision-making.

So first a look at how the board can be more inclusive in the way it operates and makes decisions and then I will spend a few minutes considering how boards can be more inclusive in communicating with a diverse membership.

The chair's role is critical in setting the agenda and developing an inclusive environment and culture. The chair's approach sets the tone, can foster and build an inclusive discussion. Chair's should check that all trustees understand the relevant factors to consider in making a decision. They should invite all trustees to share their views, perhaps asking the less experienced to comment first. The chair may invite comment from other trustees before expressing their own views and may replay in straightforward terms the key messages from a piece of complex technical advice, summarising the key decisions for the board to consider, explaining why each is important and relevant. As many boards are at the start of understanding and considering D&I training can help raise awareness. Learning from the sponsor how they have developed their own D&I policy can bring some aspects to life for the trustee board.

One trustee client who took this approach found it generated an interesting discussion for the trustees as it widened their understanding of the day to day experiences of different minority groups. As D&I covers a huge array of topics training could also be considered on specific aspects and as an example to consider the impact of unconscious bias. Advisers also have an important role in supporting the board's inclusive decision-making. Their experience of working with other schemes can provide a broader perspective. They can provide challenge to address any group think and could, for example, play a devil's advocate role in trustee discussions and support the chair in ensuring that all trustee views are heard.

In addition the advisers will have their own diversity policies and may bring additional diversity to the board. How trustees communicate their decisions to their diverse membership is really important and probably a subject for a session in its own right. Understanding the membership is key but might not be easy to achieve. Trustees usually understand basic member demographics but a more in-depth analysis may be helpful particularly for DC schemes where the benefit provision is not a one size fits all. Visibility of issues which are high on the members' agenda identifying any sections of a membership which have specific needs and understanding the members' preferred medium for communications are all helpful improving the quality and inclusive of communications.

Trustees have a number of tools at their disposal: data analysis, surveys, focus groups and member meetings can all help gain a better understanding about the diverse needs of their membership. The method of communication can significantly improve accessibility. We know literacy is a challenge for many and the average reading age in the UK is around nine years old which is typically the level of writing in the sun and I doubt most communications historically issued by pension schemes would be accessible at that level, but the increasing use of video benefit statements has been a positive step and is often well received by members and helps to overcome some of these challenges.

Trustees often spend a long time carefully crafting member communications but they may be issued into a vacuum so obtaining feedback from members can be incredibly insightful and help trustees make their communications more impactful across the whole membership in future.

We are all building our awareness and understanding and hopefully this has given you a few ideas on how to improve the diversity and inclusivity on your trustee boards.

Jason: Sarah thanks very much indeed for those insights into introducing some of great concepts of D&I into trustee board decision-making and operation so thanks very much for that and thanks to you Louise too. So I'm going to move on to questions now, already had a number of questions in so thank you for those and please do keep them coming through the Q&A tab. Louise if I could just start with you, just had a very specific question about whether or not TPR might use an app approach to the Single Code?

Louise: Yes, I will be honest I am not aware whether that is something that we have specifically considered, I say that, I am very sure our comms team will have considered it but I am not aware it is something that there are plans for at the moment but the Code itself is fully accessible via browsers on all devices basically, so it is not something that you can only kind of use on a laptop or computer, it is fully accessible and configured so that it works well on devices too, but actually that is a very interesting question that I am going to ask our comms team if that is something we have thought about doing.

Jason: OK thanks. And we are also getting some questions around sort of timing so, in terms of what we have had so far in phase 1 I guess and what next, what sort of timescales might we expect to see the further revisions of the Code guidance and so on?

Louise: Yes so we have not got those fully set out yet, we are still working through how that will work but what we do know is there is obviously a lot of work going on on various other Codes of Practice at the moment anyway so we have published our Code of Practice on CTCs yesterday, the day before yesterday, and we have got the new DB funding Code that will be coming as well so any new Codes that we produce, they will, or revised Codes that we produce will be brought into the same architecture as the Single Modular Code so that will kind of happen organically. In terms of reviewing the guidance content we are working on all of the areas of guidance where there are currently direct links into different Codes of Practice at the moment to make sure they all work, but we will be planning a kind of broader review of our guidance, again we are still working through the time scales for that.

Jason: So is it the case that … sorry, bit of echo there … schemes might be expecting to kick start from the summer with a final Code, that they can start thinking about doing the ORA and so on, to kick start that process?

Louise: Yes so our aim is to have the final version of the Code of Practice laid in Parliament before summer recess so that will mean after it has sat in Parliament for the 40 days as it will be coming into force in the autumn but it will be there published for trustees to see or for the governing bodies to see from early summer.

Jason: OK, no that's really helpful thank you. And we have just had a question as well about, I mean I guess it is probably a bit too early for you to go public on exactly what might change in the final Code but I guess it would be helpful just to understand what were the sort of one or two main areas of feedback that has sort of caused you to perhaps stop and think a bit more?

Louise: Yes so I think it is fair to say that we are not expecting there to be any, well we are not expecting there to be any real major changes in the final version. There is one area that we have kind of clarified previously that we are looking at revising which is around liquid investments and the kind of number that was put on that in the draft Code so we have already said that, you know, we will be looking at revising what we said around that. There has been, I mean we have had a lot of responses on this Code and if you take all of the kind of questions that were asked and things I think there are like something like 17,000 individual question responses that we are having to work through, so you know it has generated a lot of interest and unsurprisingly a broad range of views so I think you might see sort of quite a lot of tweaks to things but not many major changes.

Jason: OK, no that is helpful thank you. Another sort of couple of questions are around the topic and I know that it is one that certainly I have been picking up from clients around the topic of proportionality, and particularly around the own risk assessment. Sarah maybe I could just sort of bring you in on this one in terms of from a trustee perspective, looking at how you might approach this and that question of proportionality and what is going through your mind or the concerns you have around that?

Sarah: I think it is a really important and valid point and obviously very small schemes with less than 100 members are excluded but for other small schemes proportionality is key and I think helpfully the Regulators recognise that. So trustees need to take a pragmatic approach, many of the aspects of the requirements will be things that trustees already have in place in some format so that is helpful and obviously in terms of existing policies and documents there is a range in terms of the extent and content of those so smaller schemes typically may have a less in-depth approach than a much larger scheme with greater resources, so that is fine.

In terms of overall development and the new requirements I think, obviously I think we are all waiting to hear in more detail what the requirements are going to entail so that we can be fully reassured about how we can, as trustees, apply that proportionality but I think it is quite clear that that is something that we are keen to achieve.

Jason: Yes thanks Sarah and Louise any sort of comfort that you can give to trustees around that? I mean one question sort of raises the sort of prospect or fear I guess of just it being a very expensive process. Do you have any comments on that?

Louise: Yes I mean as Sarah said you know we recognise that proportionality is important and we are also aware that, you know, it could be perceived as being a box ticking exercise that, you know, has to be done in a certain structure and we have taken various steps to try and make sure that it does add value and as Sarah said we are fairly confident that most schemes will be carrying out already at least some aspects of the own risk assessment and hopefully very many aspects of the effective system of governance piece as well so the challenge will be in the kind of documentation really, for most schemes that will be the kind of new bit.

But we are kind of deliberately not dictating the length or the specific nature of the ORA documentation because we want to kind of see what emerges before putting in place any additional expectations or additional guidance, so in terms of small schemes we have in our proposals tightened the timescales where the first and subsequent ORAs have to be produced compared to what is in the Regulations but we have not dismissed the possibility of relaxing the timescale for the smaller schemes for the first ORA but we do think that yes, absolutely proportionality is, and if we see that actually you know there is this consultant led kind of over complicating and kind of making a real industry out of it where it is not proportional then that is something that we would look into.

Jason: OK that is a helpful commentary as well I think and reassuring and I guess Sarah again from sort of a trustee perspective picking up on Louise's comment there about it not being box ticking but being something that actually adds value and is useful I just wondered sort of how you thought it might play out and where, from a trustee perspective, you could see actually this could be a valuable process for us to go through.

Sarah: I think as trustees we have absolutely got to keep that front and centre of our minds. If we are going to spend time and resource on this we clearly want to get some added value out of it, if it becomes a box ticking exercise then I do not think we are achieving anything so yes, as interestingly in Louise's comments about sort of advisory consultant led sort of approaches, so I think the role of the trustee is absolutely critical in ensuring that we get out of the whole process meaningful output and through this process actually add and support the governance of the scheme. So that covers proportionality as we have already mentioned but I think we need to keep very focused in terms of what we are trying to achieve here and we are trying to understand our governance and where possible make it more effective and efficient and so if we keep that front of mind that is helpful.

Some of these changes will not cost money, you know, some of them are behavioural changes and as an example some of the diversity and inclusion aspects that we talked about earlier, they are very around behaviours and how people work within a trustee board, so those are things that can really enhance governance but do not require necessarily lots of paper filling and lots of time spent in looking at reports and so on.

Jason: Yes and just picking up on that Sarah and what you were talking about on diversity and inclusion earlier, is there any sort of particular area of the D&I piece that you see particularly coming through this exercise of the ESOG and the ORA?

Sarah: Yes I mean D&I underpins that we do in terms of behaviours as trustees and how we manage the scheme. We have covered a couple of aspects today but there is many other aspects, for example in, you know, looking at the scheme rules and how they operate and is there any sort of concerns there that they are not appropriately diverse, but I think two particular aspects probably jump out. Firstly Louise mentioned around management of governing bodies so that will then cover both the composition of trustee bodies but also how they operate in meetings, how they make effective decisions and then probably the other sort of very obvious area is around effectiveness of member communications and again as trustees are we appropriately meeting the needs of our members and communicating in a way that is effective and accessible to those members so I think those are two very easy ways or very obvious ways that D&I could underpin the work that we do here.

Jason: That is really helpful and useful I think then for all sort of sizes of schemes as well because that gives even perhaps smaller schemes with less resources something that maybe they can focus on. And Louise, from the Regulator's perspective, how do you see the D&I fitting into the Single Code and will you expect to issue more guidance around how trustees can bring D&I features into governance?

Louise: Sure, yes, so you know as Sarah said I think there is very little argument against the fact that, you know, diversity and inclusion on trustee boards is a good thing and makes for better decisions and is something we have hinted at in the draft Code but not something that there is lots of detail on in the Code, but having said that, you know, we do have a kind of separate workstream that is looking specifically at equality, diversity and inclusion in particular on trustee boards and we have a sizeable industry group actually that is divided into a number of sub-groups who are looking into kind of different areas in this phase and the intention is that we will produce off the back of that more guidance and set out clearer expectations for trustees around diversity and inclusion so, yes there is a lot more that we can and will say in the future on this but that work is being developed at the moment and I think the point about member communications is a really important one, that is something that we explored in our discussion paper that we did jointly with the FCA on the consumer journey kind of looking, and that came out as a very strong theme in the responses to that, so absolutely that is a very important area, so yes I think you can expect to hear more from us on diversity and inclusion in the future.

Jason: Great thank you. We have a couple of questions on a couple of more specific topics so the first is around the concept of a remuneration policy? That comes through the single code, a sort of new requirement? Louise, maybe just start with you on that in terms of what sort of things you are anticipating will be covered by a remuneration policy?

Louise: Yes. This is a tricky area to provide a firm response on, partly because this is actually an area we have received a lot of feedback on in our proposals so we are considering that but also because it is going to be quite specific to the scheme circumstances? So I am not going to provide spoilers for what is going to be in the final response. I cannot do that at this stage but the intention behind it is that it is a useful resource for the governing body to help understand the fees that they are paying and in particular how they are being agreed? There is a lot of focus on value for money at the moment particularly in DC schemes and you can argue that the remuneration policy is one important strand in helping schemes understanding they are getting value for the services they are paying for. We are not talking about accounting for every last penny but it is that setting up of principles that governing bodies follow when they are sourcing service providers.

Jason: Thank you and Sarah? From a trustee perspective, is the concept of a remuneration policy something that you see in action before so it is not new or do you see this as something new or just something to have to reformulate that you have already got?

Sarah: I certainly work with schemes who are already and have had, for some time a remuneration policy in place. And there are probably a couple of reasons why those boards have done that and I think one is around clarity and transparency and secondly I think to Louise's point around value for money and understanding the appropriate use of schemes. So, for many schemes this will not, as a concept, be new. Obviously for some schemes it will be but there is a tried and tested path there. I think what we – obviously wait to see if there is any more detail that would overlay on what you might already see as a typical remuneration policy in the future, is more detail or different detail going to be required and that is obviously something that we will need to wait and see.

Jason: Thank you. Another specific topic that has come up in the questions is around the interaction of the ORA and risk registers? And again I think people are sort of just grappling with their own mind about – we have these different things going on. How does one feed into the other and how do they link together? Louise, if you have any thoughts on that one?

Louise: Yes. So the risk register and the ORA they are separate beasts. Although linked, so the risk register really helps identify and records the risks that the scheme faces and also the mitigations that are put in place and another other risk management activity that the governing body might undertake. But the ORA is a regular process that means the governing body needs to assess the effectiveness and the risks that is specifically to their system of governance. So it is sort of a final check that everything is working as intended, so the kind of risks that have been identified in the mitigations, are they working in practice. Are they effective. Essentially. That is how the two play together.

Jason: And Sarah? From your perspective? Does that sort of make sense, you can envisage how that will work out?

Sarah: Yes. It does make sense but I think it is going to be quite tricky, as we said for everyone to grapple and sort of get their heads around the two distinct risk approaches. I think the way I would look at it, is really focus the IRAs around that effectiveness of the governance so it perhaps includes behavioural as well as precise metrics and controls and risks, whereas the scheme risk register is less likely to include the behavioural aspects but more likely to be focussed on very specific data measurement, SMAs, risk targets and so on. But yes, I think what we need to work through, is how we make sure that both documents are fulfilling the purpose that they have and we do not lose anything there. But really, keen to avoid duplication and so finding streamlined where again that is relevant for all schemes, but in particular for small schemes we need to make sure that we find a streamline way of providing both of these documents but in a manageable and proportionate way.

Jason: Thank you. Just taking us in a slightly different direction, there is a question around picking up on the DNI theme and just thinking about, for schemes that perhaps have not yet really focussed on that as a specific area to try and think about it. How would you – Sarah – how would you advise a scheme might kick off that process and what, from your experience, have you seen other schemes do that is really to help to do that to get everybody started on that thought process?

Sarah: And that, you know a lot of schemes are in that place. This is a topic that has been climbing up the agenda and I do not think many people would say they have grasped all aspects of DNI? I think we are all on a learning journey here. So where a trustee board is trying to grapple with this at the start, I think building awareness is really important. And probably one of the best ways that I have seen to do that is, talk and listen to the people around you. So for a trustee board, understanding the diversity approach of its advisers. Understanding, as I have mentioned, how the sponsor is approaching DNI can be really helpful and often sponsors are actually much further progressed looking at a DNI policy than the trustee board so there is a lot of learnings there that can be helpful for trustees.

And also, comparing notes with other trustee boards and understanding how they, if they are a little bit further ahead than you on the journey, understanding the steps that they have taken. So, building awareness and then building in perhaps some more structured training is just really helpful to get a trustee board thinking about the issues, thinking about what may be relevant for their scheme and then, as you build that knowledge, obviously you can then be in a better position to identify any specific actions that you want to take where you feel there is more that you can do. So, I think probably one of the key messages is, just make a start because it is quite a potentially daunting and complex topic, so just making that first step of talking to others and finding out what others are doing to approach these issues, is just a really good starting point.

Jason: Yes, no I think that is very wise and it is something that we are seeing I think exactly the same for trustee boards with the ESG topic as well which seems a bit overwhelming. Quite big, you know how do I break that down and how do I start and I think the advice of scheme is that, as you have just said, in the same with diversity and inclusion is just try and break it down, try and find some specific things that can make a difference. That is great. Thank you and thank you for all the questions that have come in during the session. We covered an awful lot of ground there. It would be perhaps, helpful I think, just to get some closing thoughts from each of Louise and Sarah in terms of, I guess very much focussed on expectations of trustees and what trustees should focus on, how they can make both the governance single code piece and diversity and inclusion, how they can effectively take those things forward and what would be your key messages and Louise, if I could start with you.

Louise: Sure. I think the key message for me is that it might seem a little bit overwhelming with the new code and everything suddenly being in one place, kind of laid bare if you like but in reality, a lot of the expectations are not new ones? So it is a really good opportunity I think for trustees, well governing bodies, to look at their schemes and just really say, actually where are our gaps and where do we need to pick this up because actually the majority of the expectations in there are not new and proportionality aside, for small schemes this may well be more of a challenge?

But obviously particularly with DC space, we know that there are now more requirements on small DC schemes to look at the value for money that they provide and actually whether they are able to offer a good value service to their savers and so, I think that is our question that ought to be in the minds of those trustees as well actually, is think about what does this mean for the value of money that we provide if we find that we are really struggling to meet these expectations and really have a look at what their next steps should be there. So I think that would be my key message and on the DNI side, I think it is fair to say that this is an area where everybody is learning?

And I think that is the important thing, is to continue as Sarah said, to raise/build our own awareness about the different issues and the different solutions that might be there and that is exactly why at TPR we have gathered a group of people that have been thinking about this and have different ways of approaching things and trying to bring that thinking together so that we can share that more widely across different schemes and have some more consistent – and creative! practice out there about how to deal with some of these issues and improve diversities and inclusions. Those would be my closing thoughts, thank you.

Jason: Thank you Louise, so Sarah?

Sarah: So I think for trustees, what we really want is to be, we want to be effective trustees with trustee boards making good decisions, timely decisions. In a way that benefits our diverse membership and working with our sponsors in making those decisions. That is the core of what we are about as trustees. So I think if we can approach both diversity and inclusion and a single approach with that in mind, we are looking through – thinking about diversity and inclusion it underpins everything that we do as trustees, our approach. But if we look at it in terms of how can we help and make better decisions. How can we improve the effectiveness of our decisions by increasing our diversity, being more inclusive and how can the – as we go through the various exercises that we have talked about through the single code, as we go through that process how can we draw out of that benefits that will enhance our governance and enhance our effectiveness and our decision-making. If we can keep that in focus for all these approaches I think we will not go far wrong and it should avoid losing focus and spending time or cost unnecessarily.

Jason: Fantastic. Thank you. Thank you both for those helpful closing comments and thank you both indeed for being with us for this session this afternoon. Really really helpful thoughts and I am sure we will have left everyone in the audience to take away on a couple of topics which are going to be big topics for trustee boards over the coming year and years ahead. Both of which interact as well, so many thanks Louise and Sarah. Many thanks to everyone in the audience for being with us today. Thank you for your questions. As I mentioned at the beginning, if you could complete the feedback form we would be very grateful indeed and I very much hope that we will see many of you/all of you on 2 February for the second webinar which, as I mentioned was with Margaret Snowden and we will be talking about transfers in particular.

Have a good afternoon everyone! And once again, thank you to all of you! Goodbye.

Louise: Bye bye.

Sarah: Bye.