If you're signing an administration or investment management agreement, ask us to review it for you. We'll make sure everything is as it should be.
We would always recommend that these agreements are reviewed before trustees sign them. Fundamental clauses to be reviewed in both types of agreement are:
- Fees and method of payment
- Warranties and Indemnities
- Exclusion of liability
- Contract term, ie fixed period or ongoing
- Circumstances in which the contract can be terminated
- Data protection duties
In relation to an investment management agreement, particular regard should be had to the following points:
- Express provision for the investment manager to be validly appointed under section 47 of the Pensions Act 1995
- Ensure that the investment objectives and restrictions are clear and unambiguous
- Ensure the manager accepts a duty of care such that in providing services it will act with the due skill, care and diligence that would reasonably be expected of a professional investment manager
- Confirmation that the manager will act in good faith and with reasonable care in its selection, use and monitoring of agents, delegates and other parties to transactions
- Inclusion of a warranty from the manager confirming compliance with section 36 of the Pensions Act 1995 which requires trustees (and any fund manager to whom discretion has been delegated) to consider the need for diversification and the suitability of the investments proposed
- Ensure that the manager has regard to the requirements specified in the Pension Fund Disclosure Code published by the Investment Management Association and endorsed by the National Association of Pension Funds
- Limit the trustees' liability to the assets of the trust from time to time
These issues are particularly relevant where newer investment products and managers are involved who do not have the same understanding of the regulatory framework for pension scheme trustees. In addition where a very fundamental delegation of powers is involved, it is crucial that the agreement correctly reflects what the trustees intend, and that they understand what is involved. Hence we have a particular focus on reviewing and negotiating agreements with fiduciary managers where “fiduciary management”, “implemented consulting” or “delegated consulting” are involved.
Do Pitmans’ Reviewing Administration & Investment Management Agreement Lawyers Have Any Particular Areas of Expertise?
- Review any investment management or administration agreement.
- Negotiate content with the provider.