Good Governance for Pension Funds
In many respects a company pension fund can be thought of as a financial business within a business. In some organisations, the assets of the pension fund may exceed the value of the company, or, more worryingly, the liabilities of the pension fund may exceed the value of the company.The critical factor determining the operational success (or lack of success) of this financial business within the business is investment return. In a Defined Benefit arrangement, this can be the difference between the fund being sufficiently funded to meet its obligations, or failing to do so and damaging the financial welfare of the company. In a Defined Contribution arrangement, it has a direct impact on the future and present wealth of the employees.
Responsibility for managing the operational success of this financial business within the business lies with the trustees of the pension fund. Typically, the trustees are representatives of the management and the employees of the company. No matter how experienced, skilled or competent they may be in their own jobs, very few pension fund trustees have any formal investment experience or qualifications. However, they have a legal responsibility to make critically important investment decisions on behalf of the fund.
Sometimes, the fear of making the wrong decision can result in no decision being taken at all - which can be even worse.
Understandably, most pension funds rely on the advice of their actuaries, investment consultants and investment managers to make these important investment decisions for them.
Independent Fund Director Services can provide you with a professional trustee who is also an experienced, qualified investment professional. The purpose of this appointment is not to replace the role of the actuary, investment consultant or investment manager but to ensure that a member of the trustee board - someone who shares the same legal responsibilities as the other trustees - has the skills, expertise and experience to:
- ensure that the fund’s outsourced advisers fully understand the trustees’ objectives and attitude to risk
- promote a decision-making framework for the trustees that will ensure the right investment issues are being addressed
- ensure that the investment strategy, structure and implementation proposed by the investment advisers is appropriate
- monitor the investment portfolio and trading activity on an ongoing basis
- assess, interpret and explain the investment advisers reports to the other trustees
- assist the trustees to evaluate the performance of the investment advisers
- ensure that there is adequate member communication and investment education if required
Independent Fund Director Services can provide you with an experienced, qualified investment professional to join or advise your trustee board.
Contact us now to find out more ...
Our services
Professional trusteeship
Investment support for trustees
Governance consulting for trustee boards
Guidance on self-assessment for trustees
Guidance on assessment of 3rd party providers
Guidance on relationships with investment advisers
Professional trusteeship
Investment support for trustees
Governance consulting for trustee boards
Guidance on self-assessment for trustees
Guidance on assessment of 3rd party providers
Guidance on relationships with investment advisers
Pension Fund Governance
Pension fund governance is still a relatively new subject. It has received little media attention and has been the focus of far less academic research and analysis than corporate governance.
Among the most prominent authorities on pension fund governance are Keith Ambachtsheer, Director of the Rotman International Centre for Pensions Management at the University of Toronto and Professor Gordon Clark of Oxford University. Recent papers from both can be found on our Journal page.
Two of the most important developments in pension fund governance in recent years have been the updated Myners Principles (October 2008) and the OECD Guidelines for Pension Fund Governance (June 2009).
The Myners Principles (Download) are six high level principles of investment decision-making and governance for pension trustees.
The OECD Guidelines for Pension Fund Governance (Download) set international standards for pension fund governance. While they reflect the best practice approaches to governance that have developed in many OECD member jurisdictions, they are particularly interesting having been published in the wake of the global financial crisis. Consequently, they place significant emphasis on risk management.
The UK Pensions Regulator provides practical guidance on good governance for trustees on its website.
Pension fund governance is still a relatively new subject. It has received little media attention and has been the focus of far less academic research and analysis than corporate governance.
Among the most prominent authorities on pension fund governance are Keith Ambachtsheer, Director of the Rotman International Centre for Pensions Management at the University of Toronto and Professor Gordon Clark of Oxford University. Recent papers from both can be found on our Journal page.
Two of the most important developments in pension fund governance in recent years have been the updated Myners Principles (October 2008) and the OECD Guidelines for Pension Fund Governance (June 2009).
The Myners Principles (Download) are six high level principles of investment decision-making and governance for pension trustees.
The OECD Guidelines for Pension Fund Governance (Download) set international standards for pension fund governance. While they reflect the best practice approaches to governance that have developed in many OECD member jurisdictions, they are particularly interesting having been published in the wake of the global financial crisis. Consequently, they place significant emphasis on risk management.
The UK Pensions Regulator provides practical guidance on good governance for trustees on its website.
