Is there a contractual obligation for investment managers to adhere to the Occupational Pension Schemes (Investment) Regulations and the Pensions Act 1995?

Are you an investment manager? Do you often get asked by Trustees of pension funds to contractually agree to comply pension related legislation and regulation in your IMAs? Here is a short Q&A which will help you decide how to respond to these requests.

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It is common for Trustees of pension funds to seek to insert a contractual obligation for the investment manager to adhere to the pensions legislation and regulation. However, in the main these obligations rest on the Trustees and an investment manager should be careful to ensure it is not assuming these obligations from the Trustee.

That said, there are provisions which will apply to the investment manager (i.e. s.36(2) of the Pension Act 1995) but these shouldn’t be contentious. In addition, it is common for clients, no matter what their form (i.e. insurance company, German KAG, Dutch pension plan etc), to request that the investment manager comply with certain restrictions to which they are subject, and usually these would be spelled out in the IMA, unless the investment manager is use to dealing with these types of clients, knows the rules already and is in a position both from an operational and compliance perspective to agree to comply without specification. Much like a UK investment manager would be comfortable to comply with COLL rules for a UK registered collective investment scheme client, as most UK investment managers would have a compliance department that would already know these rules back to front, and the investment manager would be operationally set up to deal with this as well.

Trustees are the experts, so perhaps go with the approach of asking them to detail exactly what it is they are looking to pass on to the investment manager, so that you are able to assess each obligation in isolation, rather than simply agreeing to comply with the Act/Regulations in totality.

Should you require any advice or information on using pensions-related legislation, Cleveland & Co, your external in-house counsel, are here to help.


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