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Wider issues

Investment governance: sustainability and stewardship

Further changes are also on the agenda, with new climate change related risk management and reporting requirements proposed for implementation in 2021. An imminent consultation by the Pensions Regulator on its new, consolidated Code of Practice is also expected to cover ESG requirements flowing from the IORP 2 Directive.

Read our ESG for pension schemes briefing for more detail.

Financial services regulatory risks for pension schemes

DC pension savers now have much greater flexibility as to when and how to access their pension savings. However, the freedoms can create risks for employers and trustees, through an increased potential overlap between their actions and certain types of regulated financial services activities. In many cases, the risk of breaching the rules can be mitigated through relatively straightforward controls and checks. 

Our quick guide highlights the regulatory boundaries so that you can consider whether to take or avoid specific steps, including linking with an external provider to facilitate member access to drawdown.

Data protection and cybersecurity

Trustees of occupational pension schemes should already be compliant with the data protection regime introduced in 2018. As data controllers, trustees are subject to an obligation to keep that data secure, including ensuring the security of data and identifying and mitigating cybersecurity risks. 

Read more about taking action to reduce your cyber risk using our checklist Cyber risk: practical actions to improve data security. We have a range of experience advising pension schemes on these matters, working closely with our data protection and cybersecurity experts.

Auto-enrolment and re-enrolment deconstructed

Need help with auto-enrolment and re-enrolment? Our latest guide will help you navigate the complexities of the regime.

Protecting members' DC assets

In the past it was often assumed that, in the worst case scenario of provider failure, the Financial Services Compensation Scheme would step in to compensate DC members for any losses they might suffer. In fact, FSCS compensation is only available in specific circumstances and subject to a range of restrictions. Identifying the specific risks that need to be mitigated in relation to life funds, non-life funds, custodians, providers, banks and other counterparties, is a complex task – but one that the Regulator expects trustees to undertake, by analysing the web of contractual relationships and investment structures underlying the typical DC investment platform.

Our 2017 guide sets out the issues, identifies the limitations of the FSCS, and provides a checklist of questions to help you start to gather relevant information.

Transfer rights and combating pension scams 

Transfer requests can give rise to a variety of potential errors and complaints, and are a frequent source of complaint to the Pensions Ombudsman. You can read more about this here.

Pension scams have been around for a long time but are an increasing problem and present risks to members transferring out of DC schemes as well as to DB members. You can read more about this here