Heineken goes contract-based to speed up governance

Janis Ireland, pensions governance and operations manager at Heineken, said the company chose to go down the contract-based DC route to make switching investment managers easier – while having a governance committee in place that mimics a trust-based structure.

“It gives a bit more flexibility,” Ireland told the National Association of Pension Funds 2012 conference earlier this month.

“Within the terms of reference, the governance committee has implied consent to change the managers.”

Dominic Delaforce, head of UK pension funds at Aberdeen Asset Management, welcomed a governance committee as a “great thing”, but questioned the recourse for members unhappy with its decision.

He asked delegates: “If the committee does not follow what it is meant to do, what is the comeback for a member?”

Darran Burton, head of DC regulation at the Pensions Regulator, said members might be able to pressure the committee to change track if they are unhappy.

He added: “We encourage it and we think governance committees can play an important role, but it is voluntary.”

The regulator is currently considering a range of options to ensure compliance with its six principles for good DC provision, with a new code of practice and best-practice guidance to be consulted on in December.

This could see 50 pension schemes selected at random to find out whether they are putting these principles into practice.

Burton added: “Maybe we will do a thematic review-type approach where we just pick out 50 schemes at a time and go and test [whether they are complying].”

This article first appeared on sister title schemeXpert.com