IoD welcomes Law Commission drive for pension funds to invest for the long term

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1 Juiy 2014

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.” 

ENDS

Contacts for further comments or to arrange interviews:

Christian May
Head of Media Relations

Institute of Directors, 116 Pall Mall, London SW1Y 5ED

020 7451 3263

07908 358 728
Christian.May@iod.com

Edwin Morgan
Deputy Head of Media Relations

Institute of Directors, 116 Pall Mall, London SW1Y 5ED

020 7451 3392

07814 386 243
Edwin.Morgan@iod.com

Notes to editors

  • The Institute of Directors (IoD) was founded in 1903 and obtained a Royal Charter in 1906. The IoD is a non-party political organisation with approximately 34,500 members in the United Kingdom and overseas. Membership includes directors from right across the business spectrum – from media to manufacturing, e-business to the public and voluntary sectors. Members include CEOs of large corporations as well as entrepreneurial directors of start-up companies.
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  • The IoD offers a wide range of business services which include business centre facilities, with 15 UK centres (including three in London, Reading, Birmingham, Cardiff, Manchester, Nottingham, Norwich, Edinburgh, Glasgow and Belfast) and one in Paris, conferences, networking events, virtual offices, issues-led guides and literature, as well as free access to business information and advisory services. The IoD places great emphasis on director development and has established a certified qualification for directors – Chartered Director – as well as running specific board and director-level training and individual career mentoring programmes.
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