TPR publishes new fiduciary and investment guidelines for trustees

The Pensions Regulator (TPR) has published its new guidelines for trustees to meet new investment governance rules that are coming into force next month (December).

When the rules come into effect, trustees will be legally required to run competitive tender processes to recruit fiduciary managers if their scheme uses them for at least 20 per cent of their funds.

This will also apply to existing arrangements that were not made using a competitive tender.

The rule changes were made in response to an investigation by the Competition and Markets Authority (CMA) into the investment consultancy market which revealed concerns about the industry.

The CMA found that trustees were entering into uncompetitive terms or failing to switch to providers with a better deal because they found it difficult to compare fees and performance.

TPR will now also expect trustees to set strategic objectives for those providing them with investment advice, which will enable trustees to monitor their advisers’ performances.

Fiduciary managers and investment consultants will have increased responsibilities regarding reporting charges, fees and performance to make it simpler for trustees to compare providers.

Addressing trustees and advisers in the guidance, TPR stated: “You have certain duties when working with providers of investment consultancy and fiduciary management services.

"These include setting objectives for investment consultants and tendering for fiduciary management services.

“Our guides will help you meet these duties. They will also help you to understand the how these services interact with your scheme’s governance model and the impact of these on positive member outcomes.”

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