Fiduciary duties in pension scheme management should be further clarified through guidance, rather than through statute, the National Association of Pension Funds (NAPF) has said.

The body said, in response to the Law Commission's review of fiduciary duties of investment intermediaries, it was "unconvinced" that providing more clarity through statue would be beneficial.

NAPF policy lead on stewardship Will Pomroy, said: "Pension fund trustees already have a good grasp of their fiduciary duties and understand that their duty is to act in the best interests of members to provide an income in retirement.

"This does not limit trustees' responsibilities solely to financial interests. The law as it is currently understood allows trustees to use their judgement and discretion appropriately.

"This flexibility extends to the consideration of environmental, social and governance (ESG) factors and to the fulfilment of their stewardship responsibilities as set out within the UK stewardship code."

The NAPF suggested that the Law Commission should consider writing an open letter to trustees and investment intermediaries summarising the key conclusions, instead.

The body also recommended that further thought be given to how long-term products like pensions saving vehicles are governed and regulated.

Pomroy added: "There is widespread agreement that a governance vacuum in contract-based pension arrangements can lead to unsatisfactory outcomes for members but the assignment of a fiduciary duty would not improve the situation.

"The issues relating to contract-based schemes could be better addressed through clear standards of conduct applicable to employers and providers in those areas in which they exercise discretion."

He said that employers, ultimately, who are given the obligation to put in place a governance arrangement to support the interest of pension savers.

First published 23.01.2014

monique_simpson@wilmington.co.uk