What happens if I don’t comply? Employers are likely to ask you for help to choose and run a good quality pension scheme for automatic enrolment. Our free elearning programme to help trustees understand their role. Workplace pensions law has changed and every employer investment consideration in resort management comply.
Investment governance Make sure you have the right investment governance arrangements, involving the right advisers, and that the investment strategies you put in place provide the best chance for your pension scheme members to get a good outcome. The DC code sets out the standards we expect you to meet when complying with the law. You should read the investment governance section of the DC code before you read this guide. While the DC code sets out the standards we expect you to meet when complying with the law, the guides provide information on how you might meet those standards in practice. You should read the DC code before you read this guide. The guides aim to provide you with practical information, examples of approaches you could take and factors to consider. The guides are not intended to be prescriptive, though in some instances we state what we consider to be best practice.
Often, the methods you choose to adopt will depend on the nature of your scheme and its membership. Monies arising from a transfer in from another non-AVC arrangement in order to secure money purchase benefits do not fall into this category. Certain tasks and decisions can be delegated, but you need to retain effective control, give direction, and intervene when problems are identified. It is important to obtain relevant professional advice in relation to the scheme’s investments, but it is your role to decide how scheme assets should be invested.
Your scheme’s investment governance arrangements need to be consistent with your legal powers and responsibilities regarding investment. This summarises the interaction between relevant parts of the law including trust law, pensions law, financial services legislation and the scheme’s trust deed and rules. If you’re unsure about these requirements generally, you should undertake relevant trustee training. If you’re unsure whether your scheme’s particular investment governance arrangements are consistent with the law, you should obtain appropriate legal advice. Where you outsource or delegate any part of the investment governance structure, you will need to be confident that those functions are still carried out with the best interests of beneficiaries in mind, and by people with the right expertise. If your scheme is a wholly insured bundled arrangement incorporating investment services, you should have an awareness and understanding of the investment governance arrangements the provider has in place, and be satisfied that they are in line with the beneficiaries’ best interests. Investment delegation structures Your governance structure should strike an appropriate balance between speed of action, and checks and balances to ensure that actions are appropriate.
A simple investment structure might involve four parties: the trustee board, the investment consultant, the legal adviser and the investment manager. Suitable advisers, such as the investment consultant and legal adviser, will advise the trustee board in their decision-making. This structure can work well, provided that the trustee board is able to devote enough time and skill to the scheme investments, and is able to convene quickly to make decisions if required. You may be able to improve the investment governance by setting up an investment subcommittee. This can take some of the investment workload from the trustee board. What is the size of your scheme membership? Do you have a variety of members with different characteristics for whom investment objectives are likely to vary?
Does your scheme have the resources to cover the cost of a sub-committee? Does the complexity of your scheme require you to spend more time on investment issues outside of regular trustee board meetings? Fiduciary management Fiduciary management involves a large degree of delegation to the chosen fiduciary manager. Carry out enough due diligence to be comfortable with the degree of delegation involved, particularly if you propose to appoint your existing investment consultant. Note that the skills a successful investment consultant needs are not exactly the same as those that a successful fiduciary manager needs. Establish appropriate reporting relationships and put suitable oversight in place so you can effectively monitor the performance of the fiduciary manager and the underlying mandates. You should note that fiduciary management does not relieve trustee boards of all their investment duties.
There is the potential for conflicts of interest of the various parties involved in choosing a fiduciary manager. This includes the existing investment consultant, and third party advisers. See the guide on scheme management skills for more information about managing conflicts of interest. Clear roles and responsibilities Regardless of the investment governance structure in place, all the involved parties need to be clear on areas where they make decisions, provide oversight, or give advice. It may be helpful to prepare a matrix, or table of accountabilities, showing the delegation and control structure within your scheme, to help provide this clarity.