IRELAND - The Pensions Board has admitted it is "disappointing" the pension industry needs Investment Guidelines launched by the Irish Association of Pension Funds (IAPF), to change and improve behaviour relating to scheme assets governance.

The guidelines, launched at the IAPF investment conference in Dublin, currently highlight seven key areas for defined benefit (DB) schemes and seven areas for defined contribution (DC) schemes, although Joseph O'Dea, from the IAPF investment committee, suggested these would "evolve over time".

He pointed out there have been underlying concerns the existing governance standards are not as good as they "could or should be", along with fears trustees sometimes "allow risk exposures to drift" in the "unfounded belief "they are being managed by other people.

However, O'Dea claimed the guidelines - which were produced in consultation with the Pensions Board - do not contain anything which would cause any concern or which is "terribly unexpected", and pointed out the first three principles are the same for both DB and DC schemes.

The IAPF also added while the guidelines - which came into force on April 1 2008 - are currently voluntary and not prescribed, "if there is no change in styles of behaviour" then trustees may be "forced" to adopt the guidelines, O'Dea warned.

Brendan Kennedy, chief executive of the Pension Board, also confirmed the organisation expects the guidelines to improve the investment processes of trustees, as he claimed "we've seen too many schemes where we look at investments and the structure of the scheme and find it difficult to understand the investment process behind it".

In his presentation at the IAPF conference, Kennedy added: "It is disappointing these are needed, but they are needed. There are too many schemes that can say they have investments but not investment policy. We're not looking for the power to oversee investments, but that shouldn't mean trustees should have absolute discretion."

Kennedy claimed a written investment process is the only way trustees can satisfy themselves they have decided what to do and whether they have succeeded, and admitted the Pensions Board will "want to be satisfied", in strategy meetings with schemes, the fund has an investment process in place.

He argued if trustees follow the IAPF guidelines, the Pensions Board would be "happy" there is a process in place, as currently "it is disappointing that this is not always clear".

The complete guidelines for both DB and DC schemes are available to download from the IAPF website.

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