The contractual relationship between trustees and their asset managers will come into focus in a new guide to investment management agreements, being launched by the National Association of Pension Funds tomorrow.
Trustees are responsible for the terms contained within such agreements, and the NAPF guide, published in association with law firm CMS, will provide a practical framework for approaching such contracts.
This includes issues such as manger reporting on stewardship, as well as details ontransaction costs – the disclosure of which has come under scrutiny by the Financial Conduct Authority, which last week issued a consultation.
A release from the NAPF stated: “We hope this guide will allow trustees to develop agreements with their investment managers that work better for their scheme and in turn their scheme members.”
However, in 2013 the NAPF had worked with asset management industry body the Investment Association (formerly the Investment Management Association) to entirely revise the IA’s ‘model’ investment management agreement for asset managers and scheme trustees.
We hope this guide will allow trustees to develop agreements with their investment managers that work better for their scheme and in turn their scheme members
NAPF
The IA was not involved in the NAPF’s new guide but Guy Sears, director of risk, compliance and legal at the association, said it welcomed any such initiative that supported “informed conversations”.
The issue of non-disclosure agreements – where pension funds can be contractually bound not to make public the terms and costs attached to their investments - made the headlines late last year, leading the Pensions Regulator to issue a warning to schemes about signing such agreements.
Critics say non-disclosure agreements lead to a lack of competition and allow fund managers to overcharge pension schemes, potentially stopping them from securing the best deal for members.
Sears said: “If pension funds trustees want to be able to make some information public and they are concerned that the model IMA could prevent this, then their lawyers should change or renegotiate the terms of the agreement.”
Janice Turner, co-chair of the Association of Member Nominated Trustees, said it welcomed the added support the NAPF’s IMA guide would bring for trustees.
“The AMNT is entirely supportive of any resource that helps to improve trustee understanding of their responsibilities – particularly in relation to the investments made by the scheme,” she said.
