The proposed approach for the IGG was to simplify and condense the principles into a smaller number of higher-level principles. Principles remain relevant and there is a continuing need for them to act as a benchmark for investment governance.
The Principles are supported with best practice guidance and trustee tools.
Structure
The IGG is divided into four subgroups to carry out schemes of work in defined areas, with a Main IGG acting as a control group to approve the products developed by the various subgroups. The subgroups are:
- Defined benefit (DB)
- Defined contribution (DC)
- Small schemes (focusing across DC and DB provision)
- Local Government Pension Scheme (LGPS)
Issues identified
Since the original Myners principles were published there have been significant changes to the way in which pensions are provided in the UK.
Therefore, the IGG has, and will continue to, look into various areas identified and endorsed in the consultation, and decide how these should be taken forward. These include:
Defined contribution schemes
A set of Principles for investment governance of defined contribution work-based pensions schemes were drafted and published for formal consultation in February 2010. The final set of Principles for DC schemes were published by the IGG on 4 November 2010. We've published a report summarising and addressing responses to the consultation - Investment governance of DC pension schemes (PDF).
Further to this, the IGG also worked with the Confederation of British Industry (CBI) to produce a high-level guide to investment governance for employers - Looking after your DC plan (PDF).
Small schemes
Small schemes face different issues when compared to larger schemes and would benefit from specific guidance. This is being taken forward by the IGG as part of its immediate work plan and a suite of tools and templates for small schemes of all types will be published in early 2011.
For the purposes of the IGG Small Schemes subgroup, a scheme which is a ‘small scheme’ will probably have most or all of the following characteristics:
- Active members: fewer than 100
- Total members: fewer than 500
- Assets: below £30 million
- Liabilities (FRS17): below £30 million
- Investments: all in pooled funds or with-profits
- In-house pensions specialist? No
This definition covers defined benefit and defined contributions schemes (including trust-based and contract-based arrangements).
Local Government Pension Scheme
It was recognised that the Local Government Pension Scheme (LGPS), whilst already reporting on various aspects of investment governance, would benefit from a tailored set of Principles for their use.
An LGPS sub-group of the IGG, with the involvement of the Department of Communities and Local Government and the Chartered Institute of Public Finance and Accountancy, was formed to revise the Principles for investment governance for use by Administering Authorities in the LGPS.
Myners principles update (PDF)
Defined benefit
The investment governance information needs of defined benefit schemes are quite specialised since these schemes generally have reasonable resources for carrying out necessary activities. They are also more likely to have access to advisers and consultants to assist them in monitoring their investments. The challenge for the IGG has been how to filter down the knowledge and expertise from larger schemes to those which have less access to resources and advice.
The DB subgroup of the IGG has been conducting some qualitative research on good, innovative and unique practice in large-scale DB pension schemes. The results of this work will be published as case studies and associated guidance in early 2011.
The IGG recommends use of the 2008 ‘Myners Principles’ for use in the investment governance of DB schemes.
Principles, best practice guidance and trustee tools (PDF)