Investment and funding

In trust-based schemes there is duty and an opportunity for those involved to take a collective view on where members’ money might be invested.

Trustees are recognised as having a have a “very wide power” to invest as if they were “absolutely entitled to the assets of the scheme”, subject that is to any restrictions imposed by the scheme rules (Code 13 paragraph 80 and Pensions Act 1995). Recognition of the needs of different types of beneficiaries (active, deferred, divorced and so on), and a decision on whether to set up an investment sub-committee are examples of decisions that must be taken.

In a trust-based scheme the saver is assumed to be in need of protection through the imposition of fiduciary duties on those looking after their interests. Contract-based DC schemes are different: The saver is assumed to be an active consumer making informed decisions in a well-functioning market. The development of management committees and Independent Governance Committees (IGCs) should encourage a more transparent, collective approach to investment issues that unions may find it easier to engage with.