Guideline 4. Fiduciary responsibilities

Submitted by Anonymous (not verified) on Tue, 07/10/2018 - 09:46

The board and management have a fiduciary duty in administering and managing the funds of the social security institution.

Guideline code

INVEST_00600

Mechanism

The supervisory authority or external regulatory body should conduct regular and periodic reviews to ensure the appropriate performance of the board. The supervisory authority or external regulatory body should ensure conformity to the separation of powers and responsibilities between the board and management.
The board or external supervisory authority should conduct regular and periodic reviews of the management’s performance using established standards, targets and benchmarks.
The management should establish standards and benchmarks to evaluate the performance of the investment unit(s), noting that the performance evaluation period should take into consideration the nature of the assets invested in.
Procedures manuals should document how investment policies are to be implemented by the investing institution in accordance with the prudent person principle.
Investing institution compliance with procedures manuals must be monitored and reviewed.
Staff compensation at the investing institution should be structured so that it aligns employee incentives with the investment objectives of the institution. The importance of the alignment of incentives also applies to staff appraisal mechanisms.
The decision-making process at the investing institution must be clear and transparent.

Parent

Structure

Legislation, policy or decree should define the powers and responsibilities of the board. The powers and responsibilities of the board should be clearly delineated from those of the management. There should be no areas of ambiguity, dilemma or conflict of interest. The board should not be able to absolve itself completely of its responsibilities by delegating certain functions to the management or external service providers.
Legislation, policy or decree should define the powers and responsibilities of the management. The powers and responsibilities of the management should be clearly delineated from those of the board. There should be no areas of ambiguity, dilemma or conflict of interest.
The liability of the officers and staff of the investing institution must be clearly established. The investing institution should follow the prudent person principle in managing the funds of the social security institution. The prudent person principle is integral to the fiduciary duties of the board and management in administering and managing the funds of the social security institution.