Independent Governance Committees

Since 6 April 2015, firms that operate workplace personal pension schemes have been required to set up and maintain an IGC.

These new committees are part of a package of reform measures, introduced by the DWP and regulated by the FCA, to improve the governance, transparency and value of workplace personal pension schemes and bring them more into line with trust–based occupational pension schemes.

IGCs are required to produce a publically available annual report with information on value for money and how the IGC has complied with its duty to act in members’ interests. This is intended to provide transparency about how workplace pensions operate, providing helpful information to employers when selecting a scheme and managing the ongoing relationship with the provider. The FCA rules stipulate that each IGC must have a minimum of five members, the majority of whom including the chair must be independent of the firm. Firms with smaller and less complex workplace pension arrangements can appoint an independent third party, referred to as a Governance Advisory Arrangement (GAA) to take on their IGC responsibilities.

Although IGCs do not have the same powers to enforce change as trustees of occupational pensions schemes, it seems likely that the role of IGCs will develop significantly over the coming months as the range of in-retirement products expands.

How we can help

  • Advice on the establishment and framework of IGCs
  • Assessing value for money and putting in place a verification process to ensure FCA principles are met
  • Advice on what to include in the Annual Report and chair’s statement
  • Advice on the governance of IGCs and documentation of their decision making
  • Advice / support in discussions with the FCA
  • Support in relation to issues arising from the IPB report and provider action plans.

Recent experience

  • Advising providers on the regulatory requirements for IGCs and how these can be met
  • Advising independent trustees on their appointment to IGCs
  • Advising providers on legal issues arising from changing policy holders’ default investment strategies and moving policy holders from one product to another without consent
  • Ian Pittaway, our senior partner, is the chair of Aegon UK’s IGC
  • Advising IGCs on the content of their Annual Report and the approach to be taken with key stakeholders
  • Advising IGCs on value for money and putting in place a verification process to ensure FCA principles are met.