Own Risk Assessment (ORA) - The biggest Pension Trustee Effectiveness Assessment ever
30th January, 2023
What’s an ORA Paul and what needs to go in it?
Well the good news is, it’s DIY! – And so your first action is likely to be to complete your CoI (conflict of interest) register accordingly or you may fall at the first hurdle.
The law (Pensions Act 2004 (PA04) and the Governance (Amendment) Regulations, SI 2018/1103) states that the Pension Regulator’s (TPR’s) new Code of Practice must include matters such as the carrying out of an own-risk assessment of the system of governance.
The ORA is an assessment of the system of governance.
TPR’s Code is then expected to set out the Regulator’s expectations of the conduct and practice governing bodies (Trustees to you and me) should meet to comply with their duties.
Add the two together: It’s an assessment of the system of governance, where the focus of the assessment is the conduct and practice of the Trustees.
Trustee behaviours and actions are therefore central to the ORA and evidencing that they are effective in delivering to the Trustee duties. The culture of the Trustee Board and how it manages all of the component parts of the scheme, from recruiting to the Trustee Board, effective D&I and adviser performance monitoring, to the payment of a member’s pension.
So, what does the ORA need to cover? Well, as TPR expressed in its draft code, a system of governance will include anything that can reasonably be considered part of the operation of a pension scheme. The law then also requires Trustees to apply proportionality.
As the ORA is an assessment of the system of governance, it will be assessing anything that can reasonably be considered part of the operation of the scheme, subject to any proportionality applied.
Importantly, the law requires proportionality to be applied to the size, nature, scale and complexity of the activities of the occupational pension scheme, not the scheme itself but the activities of the scheme.
So, what is in an ORA and what needs to go in it?
It’s an assessment of the system of governance, assessing anything that can reasonably be considered part of the operation of the scheme and focussed on the conduct and practice of the Trustees, subject to the application of proportionality to the size, nature, scale and complexity of the activities of the scheme.
The ORA is therefore the biggest Pension Trustee Effectiveness Assessment ever and for most Trustees it will be their first Trustee Effectiveness Assessment.
The Pensions Regulator’s single code is due to be released imminently. To find out more about ESOG and ORA take a look at our dedicated webpage or get in touch with Paul directly.