Pensions Regulator  

TPR issues guidance on investment governance rules

TPR issues guidance on investment governance rules

The Pensions Regulator has published guidance aimed at both advisers and scheme trustees setting out what they must do to comply with the incoming investment governance rules.

From next month, trustees will be legally required to run competitive tender processes to recruit fiduciary managers if their schemes use such arrangements for at least 20 per cent of their funds. 

These rules were introduced after a Competition and Markets Authority investigation into the investment consultancy market found issues, including trustees entering into uncompetitive terms or failing to switch to potentially better providers, because they struggled to compare fees and performance.

The guidance, published today (November 28), was produced to help schemes meet their duties and help them to understand "how services impact governance models and the impact of these on positive member outcomes”.

Under the rules trustees will have to set objectives for the companies providing them with investment advice so they could monitor performance and see whether the scheme was getting value for money.

Fiduciary managers and investment consultants will also have new duties placed on them around reporting charges, fees and performance to make it easier for trustees to compare providers effectively.

The guidance covers four main issues. These are:

  • How to choose an investment governance model;
  • How to tender for fiduciary management services;
  • How to tender for investment consultancy services; and 
  • How to set objectives for the investment consultant.

In its guidance the TPR stated: "Choosing an appropriate investment governance model is important to ensure you can make timely investment decisions, access appropriate advice and implement your investment strategy efficiently."

The guidance helps schemes by providing practical information and key matters for them to consider when putting together a competitive tender exercise.

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