The General Code – Trustee remuneration policy – putting pen to paper

It’s time for schemes to put pen to paper and document their policy on remuneration.

While recent blogs in our General Code Corner have looked at working out what gaps there are in your scheme’s processes and policies and how to fill them, in this blog we consider one policy in particular – the remuneration policy.

Where schemes pay trustees (or certain other individuals involved in scheme activities – see below), they are now expected to document the basis and means for making these payments.

This requirement forms part of the scheme’s effective system of governance (“ESOG”) and so applies only to those schemes with more than 100 members. However, while not bound by the ESOG requirements, it is still good practice for smaller schemes to have a remuneration policy.

Who should the policy cover?

The policy should set out the basis and means for paying those who undertake work relating to the scheme that are paid for by the scheme. This can include:

• trustees
• others who effectively run the scheme or who carry out scheme functions (for example, the in-house team that supports the scheme or an outsourced scheme manager or secretary)
• other advisers and providers.

What should the policy cover?

TPR expects the policy to:

• be proportionate to the size, scale, nature, and complexity of scheme activities
• support the sound, prudent, and effective management of the scheme
• be aligned with the scheme’s long-term interests and help assess the value of the remunerated services
• outline the principles for determining pay and the relevant decision-making process
• include measures to mitigate potential conflicts of interest
• include an explanation of the decision-making process for the levels of remuneration

TPR is not obligating all schemes to pay trustees, rather the expectation is for schemes to fully document their approach and any existing process and basis for paying trustees.

TPR is not prescriptive and does not set out exactly how schemes should be meeting the expectation. Instead, TPR expects trustees to apply the above principles to their particular scheme circumstances – there is certainly no one size fits all approach.

Where the scheme already has policies or processes for appointing, reviewing and setting fees, these can continue to be used.  It may be helpful to take different approaches to different parties who are paid.  For example, some may be more appropriate for outsourced service providers and others may be more useful where an individual is being appointed to a trustee or scheme secretarial role.

How often should you review the policy?

Schemes should review the policy in line with the requirements of the ESOG, generally every 3 years, but in practice TPR suggests that an annual review would generally be “appropriate”.

Next blog…

The subject of the next post in our General Code Corner series will be a spotlight on Internal Dispute Resolution Procedures (IDRP).

Please speak to your usual Sackers contact if you have any queries regarding the issues highlighted above.

< Back to blog