Skip to main content

Your browser is out of date, and unable to use many of the features of this website

Please upgrade your browser.


This website requires cookies. Your browser currently has cookies disabled.

Investment monitoring


Early draft of the code of practice

This code is not in force yet. It is an early version for the new code of practice consultation.

To give us feedback on issues such as the design, usability and navigation of this code, email us at

You can also read more information about the consultation.

Published: 17 March 2021

Trustees’ fiduciary duties include managing investments with due skill, care and diligence. The law requires trustees who have responsibility for investment decision-making to exercise those powers in accordance with regulation 4 of the Occupational Pension Schemes (Investment) Regulations 2005.IE1

Under section 249A of the Pensions Act 2004,IE2 governing bodies of certain schemes must establish and operate an effective system of governance (see Scheme governance) including internal controls (see Managing risk using internal controls). However, there are certain exemptions.IE3 An effective system of governance will include having systems in place to review the performance of their investments.

They may do this by using manager or adviser reports or having meetings with the managers or advisers. If they are relying solely on reports produced by their investment managers, the governing body may wish to seek independent advice to help interpret the reports.IE4

The scheme managers of Local Government Pension Schemes do not have the same obligations in pensions legislation. However, it is good practice for them to approach investment governance in the same way.

Governing bodies must be confident that investment governance (See Investment governance) is carried out in accordance with legal obligations, with the best interests of scheme members and their beneficiaries in mind, and by people with the right expertise (particularly where any of these functions are outsourced).

Governing bodies should:

  • have procedures to review and negotiate the terms of contractual arrangements and fund documents in place with investment managers and advisers as appropriate. See Managing advisers and service providers.
  • regularly monitor the performance of their scheme’s investment advisers. See Managing advisers and service providers.
  • have procedures in place to monitor their scheme’s investments and performance:
    • these procedures should consider investment returns both before and after fees, and against relevant benchmarks
    • these procedures should compare investment performance against the stated investment principles at least quarterly
    • these procedures should consider fees and costs and whether they are justified
    • where applicable, these procedures should consider the governing body’s value for members assessment
  • consider whether and how to report to interested parties, for example members, participating employers and sponsoring employers

Governing bodies should set expectations for their investment managers to:

  • ensure monitoring information is prepared and considered at least quarterly and at shorter intervals as appropriate for the size and complexity of your scheme
  • where applicable, include a stress test or scenario test to assess the impact of changing circumstances on scheme assets
  • compare net investment returns to any relevant market or industry benchmarks
  • monitor the level of investment risk run to deliver the performance and how this compares with the investment manager’s risk targets
  • consider environmental, social and governance (ESG) factors, including shareholder engagement, and have processes in place to ensure compliance. Learn more in Stewardship and Climate change.
  • ensure that controls (including those related to the security, liquidity and safe custody of scheme assets) are in place to alert them to potential financial risks related to the investment manager
  • regularly assess the effectiveness of their processes, ensuring proper review and monitoring of investments and making improvements as appropriate

Legal references

IE1Regulation 4 Occupational Pension Schemes (Investment) Regulations (Northern Ireland) 2005

IE2Article 226A of The Pensions (Northern Ireland) Order 2005

IE3Section 249A(3) of the Pensions Act 2004
[Article 226A(3) of The Pensions (Northern Ireland) Order 2005]

IE4Regulation 2 Occupational Pension Schemes (Investment) Regulations 2005
[Regulation 2 Occupational Pension Schemes (Investment) Regulations (Northern Ireland) 2005]