Lane Clark and Peacock
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4 Contributions by Lane Clark and Peacock Experts
PRACTICE NOTES
While operating an occupational pension scheme, trustees might decide to bring in an investment consultant and/or a fiduciary manager. In contrast to ‘fund managers’, investment consultants and fiduciary managers are not regarded as ‘professional advisers’ for the purposes of pensions legislation. For more detail on the rules about appointing professional advisers, refer to Practice Note: Appointing pension professional advisers and other service providers.
Development of regulatory framework
After a reference from the Financial Conduct Authority (FCA), the Competition and Markets Authority (CMA) investigated investment consultancy services (IC services) and fiduciary management services (FM services) supplied to pension schemes, and issued its final report on 12 December 2018. It concluded that trustee engagement was weak, that clear and comparable information in order to assess value for money was missing, and that clients were nudged by investment consultants towards their own, higher-cost FM offerings,
Pensions
PRACTICE NOTES
This Practice Note explores what fiduciary management services mean for occupational pension schemes, covering, among other aspects, the various models and providers, the reasons for opting for them and the possible hurdles, key points trustees should weigh when selecting a fiduciary manager, and the practical mechanics of delivery. For further detail on obligations placed on trustees of occupational pension schemes by the Competition and Markets Authority (CMA) and the Department for Work and Pensions (DWP) when appointing investment consultants and fiduciary managers, see Practice Note: Appointing investment consultants and fiduciary managers—the pensions requirements.
What is fiduciary management?
The concept first emerged in the Netherlands in the 1990s, with the UK’s initial mandate arriving in the early 2000s. Across the UK, defined benefit (DB) schemes are the primary adopters, with only limited uptake among defined contribution (DC) schemes. Historically, strategic investment advice to trustees and the asset
Pensions
PRACTICE NOTES
FORTHCOMING DEVELOPMENT :
The key provisions of the Pension Schemes (Conversion of Guaranteed Minimum Pensions) Act 2022 will commence on a day still to be designated. Regulations to be made under the Act will cover (i) requirements for survivor benefits following conversion, and (ii) the scenarios in which employer consent is unnecessary or where another person’s approval will instead be required. Separately, the government’s 2019 guidance on using the GMP conversion legislation is expected to be updated to reflect recent developments, including measures in the 2022 Act. For further information, see:
Pension Schemes (Conversion of Guaranteed Minimum Pensions) Bill
Hansard: Pension Schemes (Conversion of Guaranteed Minimum Pensions) Bill, Volume 820: debated on Friday 25 March 2022
Hansard: Pension Schemes (Conversion of Guaranteed Minimum Pensions) Bill, Volume 821: debated on Wednesday 27 April 2022
This Practice Note outlines and comments on the process to be
Pensions
PRACTICE NOTES
This Practice Note outlines and critiques the restrictions that arise when advice is provided to an individual who wishes to move from a defined benefit (DB) occupational pension scheme to a manner of defined contribution (DC) arrangement. It concentrates on what amounts to suitable independent advice, identifies which persons are authorised to deliver advice, and explains the Financial Conduct Authority (FCA) requirements placed upon those persons.
The need to take advice
Since 6 April 2015, members holding safeguarded benefits—broadly, DB entitlements—valued at £30,000 or more must obtain advice from a professional, independent financial adviser (described by the FCA as a Pension Transfer Specialist) if they intend to surrender safeguarded benefits in favour of flexible benefits—broadly, DC entitlements—whether by transferring them to a flexible benefit scheme, converting benefits into flexible benefits, or receiving them as an uncrystallised funds pension lump sum. This duty to seek advice, which this
Pensions
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