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tPR issues new investment guidance

The Pensions regulator (tPR) has had a busy couple of weeks. After laying the general code of practice before Parliament on 10 January, new guidance on investment in private market assets was issued on 24 January. This guidance follows on from the Government’s Mansion House reforms, which are intended to unlock pensions capital for industry and increase returns for savers, and the guidance focuses on privately-owned asset structures, such as private equity and infrastructure investments.

The guidance provides information to pension scheme trustees with a view to encouraging them to consider investing in private markets. tPR is careful not to put undue pressure on schemes to invest in these assets, but stresses that trustees will need to properly consider the full range of investment options, and to have an appropriate level of knowledge and understanding to be able to work with their advisers in this respect, which will include setting objectives relating to private market investment advice. tPR warns those trustees who do not have the skills or resources to explore a more diversified portfolio to consider changing their governance model or consolidating.

From this guidance, tPR can be expected to place more scrutiny on the ability of trustees to consider the full range of investment options and to engage with their investment advisers to this end. Trustees can also expect their statements of investment principles to be more closely scrutinised by tPR to ensure that they are in line with this guidance. However, investment is ultimately a matter for the trustees, and tPR will need to tread carefully if it seeks to challenge their decisions more directly.

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