Review of investment strategy

Events may trigger a review of the default strategy, for example, a merger with another organisation; a change in ownership or personnel of the investment managers; or sustained changes in market conditions. If this happens, issues to think about include taking account of innovations in DC investment products; changes in regulatory requirements; characteristics (demographics) of the membership and what happens when members come to claim their DC pension (known as the “decumulation” stage).

Principles that apply to both trust-based and contract-based schemes have been drawn up by the Investment Governance Group (IGG, Principles for investment governance of work-based defined contribution pension schemes). For contract-based schemes they argue that getting employers more engaged in investment governance leads to better outcomes. All schemes should be able to demonstrate to members how their investment governance works in a transparent and coherent way and its effectiveness should be continually monitored throughout the life of a scheme (www.thepensionsregulator.gov.uk/about-us/principles-igg-dc.aspx).