Governance
Trustees need to consider many investment-related governance issues in the management of their pension arrangements, and a number of examples are described below.
In broad terms, trustees need to be clear which investment decisions they can make, when they need to seek investment advice, and when, and on what terms, they should delegate investment decisions. Trustees also need to ensure that the basis on which decisions about their scheme's investments are made is clearly recorded.
Such information will be recorded in a Statement of Investment Principles (“SIP”). First introduced as a requirement in the Pensions Act 1995, more recent legislation, in the shape of the Pensions Act 2004, has refined further what needs to be included in a SIP, and the time frame in which it must be reviewed.
Paul Myners' “Review of Institutional Investment in the UK” unleashed a wave of investment-related governance initiatives, including proposals for scheme trustees to introduce further explanatory information in their SIP, and for trustees to produce a “forward looking” business plan for their scheme.
In response to various Myners' initiatives, the Institutional Shareholders' Committee devised a modified Statement of Principles, proposing an approach by which institutional investors, such as pension scheme trustees, or their appointed fund managers, can engage with investee companies.
We can guide trustees through the plethora of investment-related governance issues. We will make clear what is mandatory, what is voluntary, and what, in our experience, is deemed best practice, thereby ensuring that trustees address each such matter in a proportionate manner.
