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A significant
overhaul in the guidance given to trustees to take into account
a significant change in the investment landscape is needed on the
combined HM Treasury, DWP and Pensions Regulator consultation on
updating the Myners Principles, says Hewitt Associates.
The global human resources services company has published its response
to the consultation, highlighting that the Myners Principles, while
relevant when they were introduced, need to change as the UK’s
economic and investment backdrop does.
“There is little doubt that the underlying aims of the original
Myners principles remain as relevant as when they were introduced.
However, the economic and investment backdrop has changed markedly
since their inception. UK pension scheme trustees are being faced
with more and more complex investment related decisions and the
range of options available to them continue to multiply,”
commented Guy Willard of Hewitt Associates. “This also means
that governance issues have increased in importance and we believe
it is right that the principles should be updated to reflect this.”
Willard also said that “the principle of underpinning effective
decision making with continued improvements in understanding and
governance is admirable; however, the reality is that it remains
difficult for trustees to effectively challenge and adequately monitor
more complex investment areas, such as those involving derivative
strategies.
“For this reason, we are witnessing increasing interest from
some clients in a consultancy approach centred on firm investment
recommendations or even a delegation of the investment committee
role to alleviate such pressure and establish a way of working that
more directly aligns the advisory relationship,” he added.
In terms of the Investment Governance Group, Guy Mills at Hewitt
Associates says the firm remains optimistic that the Group will
go some way to addressing trustee boards that have adopted what
he labels a “tick box mentality”. “Two things
are critical if this group is to be effective – the right
mix of stakeholder participation and timely progress in the Group’s
own decision making. It remains to be seen how this will work in
practice,” he added.
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Pensions Age June 2008
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