Investment

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Investing scheme assets is a key responsibility for trustees of occupational pension schemes in order to ensure that:

  1. •

    in the case of a defined benefit (DB) scheme, they can pay benefits to beneficiaries as they fall due

  2. •

    in the case of defined contribution (DC) scheme, members have a pensions pot which they can use for their retirement

Investment powers and duties of pension scheme trustees

Trustees have a wide statutory power to invest scheme assets under section 34(1) of the Pensions Act 1995 (PA 1995). The trust deed and rules of a scheme usually also confer on trustees a power to invest the scheme assets. Trustees should also ensure that they invest scheme assets in accordance with the scheme's investment power, which may be more restrictive than the statutory power to invest.

Since most trustee boards will not include individuals who are qualified and authorised to manage investments under the Financial Services and Markets Act 2000 (FSMA 2000), trustees commonly delegate their powers to make day-to-day investment decisions to a professional fund manager, as permitted by statute (PA 1995, s 34(2)).

Trustees'

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