Week ending 14 June 2019
Yet more SIP changes
Regulations have been laid by the DWP to implement the EU’s Shareholder Rights Directive. These will require another tranche of changes to every scheme’s Statement of Investment Principles no later than 1 October 2020. Trustees will need to have a policy covering the arrangements they have with their asset managers and how they are incentivised, including how trustees monitor portfolio turnover costs. This policy will need to be included in the SIP, with the SIP and annual report being published on a website (this mirrors the DC requirements which come in a year earlier from 1 October 2019). There is also additional information to be included in a scheme’s annual report from October 2020, covering implementation of voting and engagement policies and actual voting behaviour in the year, with this information needing to be published on a website by October 2021.
CMA proposals become law
The CMA has issued a legally binding order bringing in its reforms to investment consultancy and fiduciary management. Trustees will need to set strategic objectives for their investment consultants and tell the CMA when they have done so (as well as re-confirming this on an annual basis). Investment consultants will need to report to trustees on how they have met these objectives. Trustees with existing fiduciary managers handling more than 20% of their assets will need to run a competitive tender within two to five years (depending on the duration of the appointment), if they did not do so at the outset, and annually confirm compliance to the CMA. Trustees appointing fiduciary managers for more than 20% of the scheme’s assets will need to run a competitive tender before entering into a contract. TPR will soon be consulting on guidance for how to run a tender. All parties have 6 months to ensure they are acting in line with the requirements of the order.
New combating pension scams code
The Pension Scams Industry Group has issued a new version of its voluntary Code of Good Practice in Combating Pension Scams.
Nest quits smoking
Nest has decided to completely divest from its tobacco investments, which are currently valued at £40 million. This is likely to take up to two years. The change is being made for performance reasons, as Nest believes that tobacco is a poor investment, due to stricter regulation, aggressive government legal action against the industry and falling smoking rates.
Saved from the lifeboat
Arcadia’s CVA proposals have been approved, keeping its pension schemes out of the PPF for now.