The Order confirmed that:
• Trustees wishing to appoint an FM for the first time for more than 20% of assets are required to run a competitive tender process.
• Trustees who have already appointed an FM without a competitive tender process for more than 20% of scheme assets, are required to run a competitive tender process within 5 years from the original appointment or by 9 June 2021, if later.
XPS Pensions Group’s Investment Oversight Team have developed a stream-lined and pragmatic approach to help trustees through either an initial selection process or mandatory re-tendering. Both options ensure trustees retain or appoint the right FM for their beliefs and for their scheme’s needs with a full review of commercial terms.
André Kerr Head of FM Oversight at XPS Pensions Group said: “We have spoken with a number of schemes that already use an FM arrangement and understand that the benefits to them of going through a re-tendering exercise will differ greatly, depending on their circumstances.
“Put simply, we believe that the approach that each scheme takes when undertaking a review of their existing fiduciary arrangement should be proportionate to their needs. Schemes will generally fall into one of two categories, either a streamlined review with a commercial terms refresh, or a full suitability review across all selection criteria. Either way, the benefits of complying with the Order can result in greater efficiencies overall for schemes.”
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