The National Association of Pension Funds (NAPF) has welcomed the Law Commission review of fiduciary duties of investment intermediaries.
Will Pomroy, Corporate Governance Lead, NAPF said:
“The NAPF welcomes any efforts to increase the clarity and understanding of the legal obligations arising from fiduciary duties and looks forward to engaging with the Law Commission’s review.
“We believe that the debate concerning fiduciary duty, which comes as a direct consequence of the Kay report, is useful and would help clarify the role of fiduciary concepts in pension scheme management.
“From our discussions with NAPF members and their advisers we are of the view that the fiduciary duties of trustees of pension plans are well understood. Trustees understand that their duty is to act in the best interests of members. There is sufficient scope under current law for trustees to take a longer-term view and consider wider factors. We welcome the recognition that a pension funds primary duty is to pay pensions.
“The Law Commission recognises that the duties on contract-based pension providers are much less certain and need reviewing. We agree, much of the apprehension concerning contract-based schemes could be addressed more directly through clear standards of conduct applicable to employers and providers in those areas in which they exercise discretion.”
The Law Commission shines a light on the investment market through the lens of pensions. The Commission looks at how far fiduciary duties require trustees to maximise financial return over a short time scale, and how far trustees can consider other factors, such as environmental and social issues. It also highlights contract-based pension providers and others in the investment chain where fiduciary duties are much less certain.
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