UK - The government has confirmed it will go ahead with the establishment of a joint government-industry Investment Governance Group (IGG) to oversee the updating and development of the Myners principles.

In its response to its earlier consultation concering the updating the principles - which outline best practice for trustees in investment decision making - the Department for Work and Pensions (DWP) and HM Treasury revealed it has made four decisions about the future of the Myners Principles.

These are:

There will be a smaller number of higher-level principles to provide more flexibility for different types of schemes to explain their investment approach to stakeholders; Principles will be linked to a body of higher quality, more selective and accessible guidance and trustee tools; There will be greater industry ownership of the principles, guidance and trustee tools, with the IGG taking responsibility for future development and revisions, and A more robust approach to disclosure and industry debate will be implemented, within a voluntary ‘comply or explain' approach.

The government's response to the consultation responses broadly follows the line of the National Association of Pension Funds' (NAPF) recommendations from its study completed in 2007. (See earlier IPE article: Gov't bodies to follow NAPF review of Myners)

That said, the IGG will be the key change to those proposals, as the body will be chaired by The Pensions Regulator (TPR) and will have representatives from HM Treasury and the DWP, alongside "experienced figures involved in the governance of investment decision-making on behalf of scheme members, and in particular from trustees".

The consultation response indicated the IGG will be expected to look at a number of key issues, although the updating of principles for defined contribution (DC) schemes and the development of a tailored set of principles and guidance for small schemes will be part of the IGG's "immediate workplan" once it is established.

The government also suggested a representative of the Local Government Pension Scheme (LGPS) would be appointed to the IGG and a LGPS sub-group could be established, with input from the Department for Communities and Local Government (DCLG) and the Chartered Institute of Public Finance and Accountancy, to update and adapt the guidance for LGPS usage.

The report suggested the decision to adopt a smaller number of high level principles "recognises that there is no ‘one-size-fits-all' approach to ensuring better standards of investment decision-making and governance", and instead the focus of the consolidated principles will be "continuous improvement in the governance of institutional investment".

However to support these principles the government proposed "comprehensive best practice guidance and better-integrated tools" to ensure trustees consider the issues relevant to investment decisions.

The report also confirmed the adoption of a voluntary 'comply or explain' approach to disclosure to encourage self-assessment against the principles and improve accountability to members, although it pointed out "it is for trustees to decide how they respond to this challenge".
 
In a joint foreword, HM Treasury and the DWP stated: "A strong theme from the consultation was the importance of the industry collectively being involved. We agree. Therefore we are setting up immediately an independent IGG under the chairmanship of TPR, to enable the pensions community to take responsibility for the content and implementation of the principles and associated guidance and best practice."

If you have any comments you would like to add to this or any other story, contact Nyree Stewart on + 44 (0)20 7261 4618 or email nyree.stewart@ipe.com

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