Thought one: rather than disappearing down a rabbit hole and ending up in a Mad Hatter’s tea party there are ways Alice and friends can make more sense of the Code by using a strategic looking glass.

At first glance scheme costs are seen as likely to rise in unhelpful ways as a result of the Code, without adding much value to scheme members or sponsoring employers. But looked at another way, incurring some costs upfront so as to make more secure and/ or faster strategic progress may well be worth it.

If trustees look through a lens based on clear objectives for their scheme and a shared, monitored strategy to achieve these, the risks that could knock progress off course (or opportunities to accelerate it) become easier to identify so as to focus on important risk controls and the governance needed to mitigate them and work towards the outcomes intended. This helps trustees take a step back to see how things join up and where gaps in risk management or scheme governance need to be fixed.

It then becomes easier to apply the Code, see what needs to be delegated and what needs to be reported to enable the trustees to steward a scheme effectively, in line with its scale and complexities.

By objectives and strategic risks we mean taking a holistic approach, beyond financial objectives and IRM which relates to funding, investment and covenant.

The non-financial objectives also need to be in step to enable the trustees to identify and manage the operational, reputational and governance risks in running the scheme, to deliver the end game and member outcomes as intended. These areas can be expensive and hard to fix when they go wrong.

If admin is below par, reputational and other risks will be higher. For scheme derisking if data isn’t clean, insurer pricing may be more expensive, a transaction window missed. If members don’t know the aim is to insure their benefits and why this is more secure, they may not be happy about ‘moving their pension away’ from an employer they are loyal to, and may not be willing to engage on decisions on this path.

We have stressed in our response the need to put the Code, and all the initial modules in each section of it, into a strategic context. So that it is clearer for trustees how they can best apply Code expectations. What is relevant to them, what isn’t? Who can best help the trustees meet expectations, what will fall to service providers and advisers to carry out and report on so trustees can get the assurance they need?

Thought two: In some areas TPR’s practical intentions for schemes aren’t yet conveyed in the wording. We expect TPR will be open to what comes out of the consultation response, to adapt the draft into something more useable. The Own Risk Assessment (ORA) being a notable example. TPR has been saying in events the ORA is not meant to be a burden on schemes and that it is certainly not meant to be a costly compliance exercise. This is not what a reader might reasonably infer from the draft Code which says ‘The ORA is a substantial process…’ and an annual one. Whereas the ORA requirement was for up to a maximum three-yearly assessment under IORP regulations, which would logically fit with a three-yearly rolling ESOG review (Effective System of Governance) under the Code.

As a new requirement under the regulations, some guidance on how to approach the ORA is reasonably to be expected. For example, to help trustees of different schemes sizes and complexity know what is seen as proportionate, and on how existing work on governance effectiveness, policy reviews and controls assessment can be used and may be rebadged as part of a Trustee ORA.

At present we have picked up from TPR’s events it isn’t currently their intention to put out guidance to help schemes know how to tackle the first ORA. Rather, TPR wants to see how trustees do tackle it. TPR may then follow up with a thematic review or regulatory initiative. This doesn’t seem sufficiently helpful. We expect consultation responses to persuade TPR to co-ordinate the Code with guidance on new areas, the ORA in particular.

And more broadly, Code wording and guidance to help trustees consider what ‘proportionate’ means for their scheme since this word features in all the Code modules that go towards making up an ESOG.

So although there are issues with the draft Code as it currently stands, looking through the strategic looking glass, there are two ways – top down and bottom up – it can be improved to help trustees and TPR be on the same page for manageable governance to deliver the DB member promise and help members optimise their DC scheme outcomes.