Legal & General is to oversee its entire contract-based book of corporate pension business with a new investment governance committee that will mirror the governance offered through its mastertrust.
Called Independent Governance Oversight (IGO), the new service is designed to operate both with schemes’ existing governance committees, or where there are none, to take sole responsibility.
L&G says it is making the launch ahead of anticipated regulatory action likely to follow the OFT investigation into workplace pensions.
The provider points to the significant legal gap between those overseeing trust-based and contract-based pension schemes. While providers have general suitability duties under Conduct of Business rules, employers and corporate investment advisers have no legal or regulatory duties towards schemes.
L&G says the committee will review existing defaults in contract-based schemes.
L&G has also confirmed the membership of its IGO, across both its mastertrust and contract-based schemes, with independent members Steve Carrodus, director of Pitmans Trustees and LGTL chair Paul Trickett joining three L&G members, including Tony Philbin, Paul McBride.
The provider also confirmed that its master trust will be offered to employers staging in 2014 at a uniform, non-underwritten charge that will be similar to Nest’s.
Trickett said: “Even with the impetus of political will, it is difficult to envisage a situation where employers can routinely upskill to contribute meaningfully to the governance process, and many employers have insufficient HR budget to pay for advice.
“To help bridge this gap and to avoid the potential conflicts of interest inherent in a system whereby only the provider is responsible, L&G is implementing a new governance structure, called Independent Governance Oversight (IGO). I firmly believe IGO will help deliver better outcomes to members of L&G’s contract-based schemes and further raise the bar of contract governance as a whole.”