Responding to the publication today of the Law Commission’s report on pension trust investment, the IoD welcomed its clarification that pension fund trustees are not required to maximise short term gains at the expense of long term returns.
However, the IoD stresses that the objective of maximising financial returns – to finance a satisfactory income in retirement for the fund’s beneficiaries - should always be overriding concern of pension trustees. The pursuit of other investment objectives should always remain subordinate to this underlying fiduciary duty.
Commenting on today’s report, the IoD’s Corporate Governance Adviser, Oliver Parry, explained:
“We welcome the conclusion that pension funds should invest to secure the best financial return over the long term for their beneficiaries. There is still some confusion amongst trustees over the time horizon of their investment mandates. The Law Commission is clear that they can also require their fund managers to invest with a long-term perspective.
“Other investment criteria, such as environmental and ethical concerns, may also be taken into account by trustees when awarding mandates. But they should never override trustee’s basic fiduciary duty of generating the best possible retirement income for the fund’s beneficiaries.”
Contacts for further comments or to arrange interviews:
Christian May Head of Media Relations
Institute of Directors, 116 Pall Mall, London SW1Y 5ED
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