UK: TPR's General Code Of Practice: Communications And Disclosure

1. Introduction

The Pensions Regulator's General Code of Practice (the Code) took effect on 28 March 2024.

Among other things, the Code sets out the Pensions Regulator's expectations in relation to Communications and Disclosure. This article provides an overview of:

• What the Communications and Disclosure section of the Code covers
  
  
• What's changed from the Regulator's previous guidance
  
  
• Two areas that trustees could focus on to develop their effective system of governance (ESOG) for communicating with members, namely:

1. Refreshing their communications strategy

2. Reviewing their internal dispute resolution procedure

The Code consolidates and replaces 10 former Codes of Practice, and this briefing forms part of a series which also covers the other sections of the Code (Governing Bodies and the Effective System of Governance, Funding and Investment, Administration, and Reporting to the Regulator). The digital version of the Code is now available on the Pensions Regulator's website, where its presentation is integrated with the remaining 6 Codes of Practice that have not yet been formally consolidated into the Code.

2. Communications and Disclosure: overview

The Communications and Disclosure section of the Code is divided into two parts – the first on 'information to members' and the second on 'public information'. The 'information to members' part sets out some important 'general principles' for communicating with members, as well as sections dealing with specific communication or disclosure requirements. For example, there are sections on annual DC benefit statements, DB summary funding and benefit statements and retirement risk warnings. The 'public information' part includes content on dispute resolution procedures.

A word of caution: this section of the Code is not a summary of all legal requirements in relation to communicating with members and it should not be used a 'checklist' for these purposes. Instead, it focuses at a general level on how the Regulator expects trustees to communicate with members.

What's new?

The Communications and Disclosure section draws together and expands on content from various former Codes of Practice, so a lot of the content will already be familiar to many schemes. Two helpful additions are:

• Chair's statement – the Code now expressly clarifies that sensitive information which is immaterial to the statement, such as their Chair's signature, may be concealed before the statement is made public.
  
  
• Pension scams – the Code explains that trustees should take appropriate steps to mitigate the risk of scams as part of their "internal controls" and suggests that trustees can, if they wish, pledge to do more to combat scams and follow the principles of the Pension Scams Industry Group's "Combating Pension Scams – A Code of Good Practice".

The only completely "new" module in this section, which did not form part of a former Code of Practice, is about audit requirements. This section summarises the existing legal requirement for certain trustees to prepare audited accounts. Audited accounts must be provided to members on request (as part of the annual report), but it is noted in the Code that trustees may wish to consider publishing the accounts on a website that is free to access for scheme members. In our experience, some schemes may already have been doing this for many years on a voluntary basis.

What's not included?

There are no particular areas within the Communications and Disclosure section of the Code where the Regulator has indicated that further additional content will follow in the short-term, though we can expect the Code to continue to evolve into the future – for example, inclusion of case studies and more material on digital communications have been flagged as areas for potential further development. For the time being, schemes should be aware that the Regulator has issued separate guidance outlining the Regulator's expectations on specific communications issues (for instance, on communicating and reporting and equality, diversity and inclusion).

Actions: the Code is a useful prompt for trustees to look again their communications strategy, providing an opportunity for schemes to refresh how they engage with members. In particular:

• Trustees can consider how their ESOG takes account of the Regulator's expectations regarding communications with members, how it mitigates the risk of pension scams and how it resolves disputes through its internal dispute resolution procedure (IDRP).

3. Refreshing the communications strategy

• Review: As a first step, it's sensible to check when the scheme's communications were last reviewed at a general level (asking any outsourced communication or administration providers as needed). This means not simply updating communications to comply with changes in law or guidance but stepping back and considering them from a member perspective.
  
  The Code states that communications should be accurate, clear, concise, relevant and in plain English. This is easier said than done in a pensions world full of jargon and complexity. But it may be time well spent: refining and simplifying communications, with the scheme's particular membership in mind, may improve meaningful member engagement, help members make informed decisions and protect them from pension scams.
  
  
• Member feedback: The Code says that trustees are expected take account of member feedback, so thinking of ways to obtain that feedback is a great starting point. This could be as simple as asking appointed member-trustees for their input. Sometimes it's also possible to pick up indirect feedback from what members say when they interact with the scheme on a day-to-day basis (for example, have the administrators received lots of calls from members saying they don't understand a newsletter or benefit statement or are confused about their options?). More formal and rigorous methods would include surveys or focus groups.
  
  
• Technology: The Code says that trustees should consider the technology available to them and what is appropriate for the scheme's members. There may be a working assumption that pension scheme members value hard copy letters, but would some or all of them engage more actively with email or other online messaging options? Can the employer sponsor provide support, particularly where active members are involved?
  
  
• Accessibility: Pension schemes will be communicating with members at various stages of their lives, including elderly members who may have additional accessibility needs. Trustees should consider various communication methods to try to make sure the important messages they are trying to get across can be understood by as many members as possible. The Code says trustees should consider options such as accessible online content, audio and Braille options, large font and languages other than English. Third party administrators and communication providers may be able to offer further support in offering these options, alongside the Regulator's Communicating and Reporting Guidance (which is referred to in the Code) and the Government's "Accessible communication formats" guidance.
  
  
• Equality, diversity and inclusion (EDI): As a general point, it can be useful for trustees to consider communications in the context of any wider EDI principles/strategy that they have adopted. The Regulator suggests in its separate EDI Guidance that member communications could be tested against the trustees' agreed definition of EDI and their EDI objectives. The inclusivity of communications may be an important part of achieving those objectives. This will not only include making communications accessible for disabled or vulnerable members, but also using language and communication styles which engage groups which may have in the past felt excluded (for example, by excessively formal or technical language, or even wording or benefit examples that contain unconscious assumptions about members or their circumstances).

4. Reviewing the internal dispute resolution procedure

The Code is clear that the Internal Dispute Resolution Procedure (IDRP) forms part of a scheme's ESOG and should therefore be reviewed as part of your wider ESOG project. The Code suggests that trustees should regularly assess the effectiveness of the IDRP and be satisfied that those following the process are complying with the requirements set. This goes further than simply ensuring that the process complies with minimum legal requirements and 'reasonable time periods' set out in the Code.

Trustees should be satisfied that the time and action taken to reach a decision and notify the applicant are appropriate to the situation. Importantly, trustees should be able to demonstrate this. The Regulator suggests that it is good practice to keep members informed about the IDRP, including keeping applicants advised of the progress of their dispute.

An IDRP review might involve a closer look at a sample of complaint cases and considering factors such as how smoothly the process ran, whether deadlines were met, any feedback from applicants and how robust the decisions were (for example, have any decision-making processes been scrutinised by the Pensions Ombudsman?).

Actions:

• Review the scheme's IDRP and the processes for following it, and consider whether any improvements could be made to meet the Regulator's expectations set out in the Code.
  
  
• Consider undertaking an audit of recent complaints to assess the effectiveness of the scheme's IDRP.

5. Complying with the Code

Although the Code is not legally binding, it can be used in legal proceedings as evidence in support of a claim of non-compliance with a legal requirement. The Regulator may also cite its expectations, as set out in the Code, when taking enforcement action. Our early experience is that many schemes are therefore actively allocating time and resources to making sure they are complying with the Code. Schemes may want to consider the extent to which their existing policies, processes and governance structures already meet the expectations of the Code, and whether there are other areas that may need updating or documenting more fully.

In our briefings, we use the language "should" to refer to the Pensions Regulator's expectations of trustees as set out in the Code. However, the Code states that trustees should "use their judgement as to what is a reasonable and suitable method for ensuring compliance for their scheme". As noted in previous briefings, legislation states that ESOGs must be "proportionate" to the scheme's "size, nature, scale and complexity of [its] activities". Consequently, there is a degree of flexibility for schemes in their approach to the Code by thinking about what is reasonable and proportionate in their relevant circumstances. We have not included in this briefing the aspects of the Code applicable to public service pension schemes.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.