UK – The UK government says it has reviewed the take-up of the Myners principles on institutional investment and found that “further action is needed” for pension schemes - in particular on trustee training and decision making.
The National Association of Pension Funds said that despite progress, there was no room for complacency.
"I welcome the efforts that pension schemes, particularly the larger ones, are making to adopt the Myners principles: everyone - consumers, industry and government, but especially pension schemes themselves - stands to benefit as a result,” said financial secretary Stephen Timms.
“However, our review shows that further action is needed to accelerate progress in key areas, in particular in relation to trustee expertise and decision-making processes." The report was timed to coincide with a separate report on actuaries (see separate story).
The government said: “The review marks another important step in the government's programme of reform to improve the efficiency of the investment chain which links savers and the companies in which they invest.
“This is of vital economic importance for productivity and long-term growth, because the investment chain is a critical mechanism for ensuring that investment is efficiently allocated.”
Myners, the author of the original Myners Review, said: "I am very pleased that the principles are now widely accepted as the benchmark of best practice for investment decision-making. But more change is needed before the vision of a much-better functioning system I set out in my original report will be realised."
The government has put forward new proposals to “strengthen and amplify” the principles.
Among the changes:
- The chair of the board should be responsible for ensuring that trustees taking investment decisions are familiar with investment issues and that the board has sufficient trustees for that purpose
- For funds with more than 5,000 members, the chair of the board and at least one-third of trustees should be familiar with investment issues.
- Funds with more than 5,000 members should have access to in-house investment expertise equivalent at least to one full-time staff member familiar with investment issues.
Funds should also contract separately for strategic asset allocation and fund manager selection advice.
- Trustees should provide the results of monitoring of their own performance to members, and ensure that key information provided to members is also available on a dedicated fund website.
Christine Farnish, chief executive of the NAPF, said: “Pension schemes have already made demonstrable progress towards the objectives set out by Paul Myners in 2002. It is unrealistic to expect rapid progress in some of the areas identified, and wholesale application of the principles for smaller schemes is not appropriate.
”There is, however, no room for complacency, and we are pleased that the NAPF has been asked by the Government to review further progress in 2007. In the coming weeks, we will take a close look at the report and its implications for pension funds, and will respond to the Government next March.”
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