Best practice guidance is often very helpful but it should not be blindly followed for three very important reasons.
Guidance produced by industry groups has contributed a great deal to pensions best practice. I’ve been involved (and continue to be involved) with producing industry guidance and in my experience, when industry figures are willing to give up their time to help raise standards or deal with tricky issues, the results often provide beneficial insights for us all. I don’t believe there have ever been as many industry groups or best practice guides as there are currently. So now seems an appropriate time to give a reminder that best practice guidance should come with the following health warnings:
- One size does NOT fit all: Best practice guidance cannot take into account the particulars of your situation. If applying general ‘best practice’ would result in a perverse outcome, then consider if ‘better practice’ would be to do something different. For example, administrators should not compromise the robustness of their scam checking processes to rush through a transfer to meet SLA timeframes or other internal or external guidelines.
- Best practice guidance is just a view: Best practice guidance is not gospel. It is just the view of the individuals involved in producing the guidance. It is quite plausible that there are better approaches out there. Most best practice guidance actually stems from people seeking to do things better than before. Much new Pensions Regulator guidance comes from the Regulator’s latest observations of how well run pension schemes are operating.
- Best practice changes over time: As best practice guides become older their relevance to current market practice becomes more detached, and they could even become overtaken by new law. ESG is an area where lots of guidance has been offered in recent years, but it is also a fast developing area of law that requires guidance and best practice to continually be checked and re-checked.