17 October 2014

IMA proposes quality standards for pension investment governance to help ensure positive outcomes for consumer

The aim is that such a set of quality standards will ultimately help improve the likelihood of positive outcomes for the end beneficiaries. 

"Independent governance committees are a step in the right direction. With millions of people being auto-enrolled into defined contribution default strategies, good investment governance, which is vital in driving member outcomes, has never been more important," Jonathan Lipkin, the Investment Management Association's (IMA) Director of Public Policy, explained. 

"As part of this focus on quality, the IMA has proposed a set of standards for investment governance to ensure that DC default strategies are fit for purpose. Our approach would be applicable to both contract and trust-based schemes. It sets actionable goals which would offer a practical and consistent way for all DC schemes to demonstrate that they are delivering on behalf of scheme members. Rather than impose an additional regulatory burden, the intention is to develop a 'one stop shop' approach which can satisfy quality expectations. We look forward to working with the government, regulators and other stakeholders in further developing this initiative," he noted.

The IMA is proposing an approach, which would provide:

• A practical roadmap to develop and implement default investment strategies, acting as a quality check for standards.
• A 'one stop shop' that could be accessed in order to assess behaviour and ensure that requirements in both the contract and trust-based environments are met.
• A consistent document supplied by schemes to employers who need to ensure that they are selecting a default arrangement that is fit for purpose when making scheme selections.
• A procedure with the flexibility and capacity to evolve over time, adapting to changes in the marketplace, including innovation in delivery.

Full press release

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