Industry Voice: Using fiduciary management to achieve your objectives

Industry Voice: Using fiduciary management to achieve your objectives

One of the key benefits of fiduciary management is that it gives trustees the time and resources to focus on high-level issues, which should mean they can make more informed decisions about strategy.

Clear and transparent reporting is essential to support trustees in this process. Moreover, good reporting is also crucial in monitoring the progress of the fiduciary manager against their prescribed objectives.

For all UK DB pension schemes, the fundamental long-term goal is to be able to meet future pension payments. This means that the pension scheme's assets should at least match the liabilities at the point they are to be paid. So two key questions for the fiduciary manager are:

  1. How will they design a strategy to meet this long-term funding goal?
  2. How will they put it into effect?


Regular reporting should then signal their progress in maintaining or improving the funding level and whether the pension scheme is on track to achieve its goals. Although the overall objective is clear, measuring the performance of a fiduciary manager is more difficult than, say, that of an active UK equity fund manager. The success of the latter can usually be assessed quite clearly by looking at their performance in relation to a benchmark, such as the FTSE All Share Index. The reasons for this performance might then be explained in terms of their ability (or otherwise) to pick stocks which performed better than the benchmark. In contrast, the reasons for a change in funding level might be more complicated to determine. The following checklist sets out the key questions trustees should ask of their fiduciary manager to assess their performance:

Watch our video "Strategy monitoring and staying in control" below



Important information:

This document is intended to be for information purposes only and it is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Information herein is believed to be reliable but Schroders does not warrant its completeness or accuracy. No responsibility can be accepted for errors of fact or opinion. Reliance should not be placed on the views and information in the document when taking individual investment and/or strategic decisions. Past performance is not a reliable indicator of future results, prices of shares and the income from them may fall as well as rise and investors may not get back the amount originally invested. Schroders has expressed its own views in this document and these may change. Issued by Schroder Investment Management Limited, 1 London Wall Place, London EC2Y 5AU, which is authorised and regulated by the Financial Conduct Authority. For your security, communications may be taped or monitored. CS1525b

More on Canada

Pension funds keep Canadian M&A activity afloat

CANADA - Canadian pension funds kept mergers and acquisitions (M&A) activity in the country afloat in the third quarter, according to PwC.

clock 01 November 2011 •

Canadian longevity risk transfer market could hit $20bn

CANADA - The nascent Canadian longevity risk transfer market could hit $20bn by 2020, Swiss Re finds.

clock 26 October 2011 •

OTPP, Illinois TRS invest in NXT Capital

CANADA/US - Teachers' Private Capital, a unit of the C$107.5bn ($106.4bn) Ontario Teachers' Pension Plan, and the $37.3bn Teachers' Retirement System of the State of Illinois have made equity investments to finance company NXT Capital.

clock 26 October 2011 •