TPR DB investment guidance emphasises strong governance and decision making for trustee boards


Paul Phillips, partner, comments:

TPR’s DB Investment Guidance has identified effective governance as a key theme for trustees.  In particular, the Regulator has emphasised the need for trustees to have a sound grounding in the legal framework underpinning trustee duties, including the FCA regulated environment in which schemes operate.

This will not come as a surprise to anyone [working in pensions at the moment] and the Guidance should provide a useful framework within which trustees can test their own investment governance arrangements.  Trustees will need to consider the structures which support their decision making process and the roles and responsibilities within the scheme’s investment function.  The Guidance also suggests trustees look both at how effectively they negotiate commercial and legal terms but also how they monitor and critically evaluate providers’ performance on an ongoing basis.

Many schemes are already very tightly governed from an investment perspective. This Guidance should however provide a helpful starting point to help schemes review the way that they make and implement investment decisions, to ensure that they have a structure that works for them.

We see the Guidance as a timely contribution to an area which has received more and more attention in recent years.  The Guidance also offers a positive way of looking at the trustee’s role, which has sometimes been questioned in an increasingly professionalised environment.   Good governance should be about adding value to the investment process, and this Guidance provides an occasion/opportunity for trustees to consider how best to do that in the modern trustee environment.

 

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