The Investment Management Association (IMA) has proposed a set of quality standards for investment governance processes that can be applied to default investment strategies of defined contribution pensions schemes.
The aim is that such a set of quality standards will ultimately help improve the likelihood of positive outcomes for the end beneficiaries.
Go deeper with GlobalData
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
In its response to the FCA’s consultation on the proposed rules for Independent Governance Committees for contract-based pension schemes, the IMA outlines its proposal and voices support for the government’s focus on improving the quality of workplace defined contribution (DC) pension schemes.
Jonathan Lipkin, IMA’s Director of Public Policy, said:
"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. 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.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalData"We look forward to working with the government, regulators and other stakeholders in further developing this initiative."
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.
