Ethical Challenges Facing Pension Fund Trustees

Publication type: Report
29 October 2014

Tags: Corporate governance

This report looks at the ethical challenges facing pension fund trustees - ranging from fiduciary duty, investment decisions and conflicts of interest to employing consultants. It poses at twelve key questions which pension fund trustees need to ask to help guide them in making sound decisions, and offers answers that, by applying an ethical approach, aim to cut through the uncertainty and help trustees make the right decisions.

Speed read

Three core principles guide this report:

  1. The primary purpose of the fund is to deliver on its promise to provide pensions to those who rely on it, even into the distant future.
  2. Trustees have an over-arching obligation to scheme members to deliver on the pension promise.
  3. The biggest threat to sound decision-making comes from conflicts of interest where the pressure on trustees is greatest. Conflicts must be openly acknowledged and ways found ensuring that the interests of beneficiaries remain paramount

Pension fund trustees face a multitude of decisions. They come under pressure from many competing interests: from beneficiaries, regulators, sponsors, unions, investment firms and lobby groups. The result can be confusion and uncertainty. Scheme members expect trustees to use their judgement. An ethical approach to decision-making – applying values such as fairness, respect and openness – can help lead to better quality choices.

This IBE Report looks at twelve key questions that trustees should ask themselves - ranging from fiduciary duty, investment decisions and conflicts of interest, to employing consultants. It offers answers that, by applying an ethical approach, aim to cut through the uncertainty and help trustees make the right decisions.

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