Statement of Investment Principles

What is a Statement of Investment Principles?

A SIP is a written statement governing decisions about investments for the purposes of an occupational pension scheme.

Who is responsible for the SIP?

Trustees of most occupational schemes must prepare, maintain and periodically revise the SIP. Before preparing or revising the SIP, trustees need to obtain and consider written investment advice and consult the sponsoring employer of the scheme. A review of the SIP must take place at least every three years and without delay after any significant change in investment policy.

Trustees may be liable for civil penalties if they fail to prepare or maintain the SIP.

What information should the SIP contain?

The SIP must cover at least the following:

  • the trustees’ policy for securing compliance with their statutory duty to choose scheme investments (under section 36 PA95);
  • their policies relating to:

– the kinds of investments to be held by the scheme;

– the balance between different kinds of investments;

– risks – including the ways these are to be measured and managed;

– the expected return on investments;

– the realisation of investments;

– the extent to which the trustees take into account social, environmental and ethical factors in selecting, retaining and realising investments; and

  • their policy (if any) relating to how the trustees exercise voting rights attached to investments.

Are there any exemptions?

Different SIP requirements apply in respect of wholly-insured schemes. Schemes with fewer than 100 members and certain local authority and public sector schemes do not have to prepare a SIP at all.