A traffic policeman on motorway patrol passed a car that appeared to be driving at 11mph. The policeman pulled the car over, and asked the driver why he was going so slowly.
“I saw a sign saying that the speed limit was 11mph” said the driver. “A big blue sign, with white numbering.”
“That’s not the speed limit, that’s the road name – the M11” said the policeman. The policeman then looked at the passenger, who was sitting rigid in her seat, a rictus grin on her face. “What’s the matter with her?” asked the policeman. “Well” said the driver, “we’ve just joined the motorway from the A120.”
Interpreting laws and regulations can be difficult – particularly in highly technical areas such as pensions, where legislation can be opaque at the best of times. The Pensions Act 2004 tried to ameliorate this problem by giving the Pensions Regulator the power to flesh out legislation by issuing Codes of Practice. Codes of Practice have a special status: they have to be laid before Parliament before they come into force; they are admissible in legal proceedings; and if they appear to be relevant to the question the court has to decide, the court has to take them into account. (Albeit, on occasion, judges have “taken into account” Codes of Practice by brusquely dismissing them.)
All well and good. But there are currently 15 Codes of Practice, many overlapping, plus accompanying guidance. Instead of acting as a roadmap, Codes of Practice have all too often helped add to the confusion – particularly where, presumably in an attempt to “nudge” behaviour, Codes of Practice go further than the underlying legislation does.
Given this, the Regulator’s recent statement that it will be reviewing its Codes of Practice over the next year, and expects “that this will involve combining the content of our current 15 codes of practice to form a single, shorter code” is very welcome.
This new approach appears to be in response to the Occupational Pension Schemes (Governance) (Amendment) Regulations 2018, which came into force earlier this year, and which transcribed into UK law the governance requirements in the EU’s IORP II Directive. The new Regulations require schemes to have an effective system of governance that is proportionate to their size, nature, scale and complexity, and also to have a documented risk assessment. The Regulator’s “single Code” will focus on its expectations of how schemes will meet these new governance requirements.
This should make it easier for trustees and employers to understand what the Regulator’s overall governance expectations are, rather than having to navigate 15 separate Codes which address governance in 15 slightly different ways.
It is not clear whether the Regulator intends to keep the non-governance related parts of its existing codes. We assume that it will – and that they will either remain as stand-alone Codes, or will become appendices to the main, governance-focussed Code.
However clear the new Code is, there will no doubt still be ambiguities. The story is told of a (different) traffic policeman who stopped a car after noticing that it was full of penguins. “Take them to the zoo immediately” the policeman told the driver. The next day the same policeman stopped the same car, still full of penguins, only this time, the penguins were wearing sun glasses. “Didn’t I tell you yesterday to take these penguins to the zoo?” said the policeman. “I did” the driver replied. ” And today, I’m taking them to the beach.”
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