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Scheme governance

CDC code in force: 1 August 2022

Good governance is important as it ensures that a scheme is well-run and that issues are managed effectively. Effective governance provides the trustees with oversight of the day-to-day running of the scheme, clear accountabilities and delegations, and a basis for assessing that the scheme is meeting all legal requirements over time. The regulations set out matters that we must take into account in respect of scheme governance as part of the systems and processes requirementSE1.

We expect to see evidence that a CDC scheme has a coherent governance structure with clear accountabilities and delegations, and for trustees to demonstrate how the scheme will be governed on a day-to-day basis. We are more likely to be satisfied where the matters set out below are addressed:

Requirement Matters more likely to satisfy TPR

Governance map

  • There is a map setting out the governance structure for the scheme. The purpose of the map is to detail the different governance functions, who is responsible for them and who is also involved.
  • The map sets out the governance structure split by function.
  • The map identifies and documents all the functions the trustees think relevant, including:
    • managing the trustee board
    • administration
    • investment
    • risk
    • actuarial matters
    • member communications
  • For each function, the map identifies:
    • a responsible person
    • all individuals who are involved in decision-making or who have a significant role
    • any sub-committees
  • The map is reviewed at least annually.

Responsible persons
  • A responsible person is identified for each function. This is the person who has day-to-day responsibility for managing the function and will manage the planned work set out in the objectives statement.
  • This needs to be an individual who falls within the fit and proper regime.
  • A statement is provided to explain why the responsible person has sufficient skills to manage the function.
  • The responsible person has relevant experience in the function they are responsible for. This should also be reflected in the evidence provided for the fit and proper assessment.
  • Where an individual is a responsible person for more than one function, there is an explanation of how they will have the capacity to manage multiple functions.
Objectives
  • A statement is provided for each function, setting out the aims and objectives and key tasks to be undertaken.
  • Key risks are identified and fed into the main risk schedule.
  • There is a plan of work for the year ahead.
  • All subcommittees are identified, and membership and meeting dates identified.
  • It is clear who the decision-makers are and who has to be consulted.
  • The statements include the type, source and frequency of management information necessary to enable effective monitoring.
  • The statements reflect the matters identified below in the processes module.
  • The statements are reviewed annually and revised as needed.

Legal reference

SE1 Paragraph 8 of Schedule 5 to the Regulations

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