UK - The Governance Compliance Statement proposed by the Department of Communities and Local Government (CLG) is likely to become "a simple tick-box exercise" for pension schemes, according to consultancy firm Mercer.

Mercer warned the focus on pension funds' operational issues in the simplified self-assessment process leaves insufficient room for effective decision-making by the board and trustees.

It also gives too little encouragement to the committees responsible for the oversight of local authority pension schemes to take a broader view on what constitutes good governance.

"The proposed Governance Compliance Statement from the CLG is likely to become a simple tick-box exercise for those committees responsible for the oversight of local authority pension schemes," the consultant finds.

Rachel Brougham, principal and head of UK governance consulting at Mercer, commented: "The guidance is distilled into a series of principles largely concerned with process and operational issues such as voting, representation, meetings, access and reporting."

She added: "Only the most proactive authorities are likely to respond to the excellent suggestions and guidance on best practice within the report."
According to Mercer, good scheme governance requires governing bodies to articulate their key priorities, enabling them to focus on activities that support these.

"It also allows them to identify and manage the associated key risks and supports clear accountabilities," said Brougham.
Mercer also said it welcomes the guidance principle on training plans, but warned any such activity needs to be relevant, focused and timely.
According to Brougham: "To be effective, training programmes need to be tied into the decision-making process. For example, training trustees on investment issues should happen close to the time when decisions are taken so the theory can be put into practice straight away."

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