The ISSA Guidelines for Social Security Administration were prepared by the ISSA General Secretariat wih the ISSA technical commissions.

When a decision is made to change external investment managers, a number of governance issues are considered in the transfer. These include information requirements related to the change, consideration of fees or surrender penalties, and communication to those impacted upon by the change, including custodians, members and accountants. While transitioning assets between arrangements the risks associated with the actions are identified and managed appropriately and, at the same time, the institution also seeks to minimize costs where possible.

Sufficient procedures are put in place to ensure that an appropriate level of operational due diligence is conducted on external fund managers.

The incentives of the external fund managers are aligned with the overall investment objectives of the social security institution.

Sufficient selection due diligence is conducted when selecting external fund managers.

Best practice is followed when selecting external fund managers.

This guideline outlines the administrative processes to select external fund managers. Guideline 30 outlines the investment issues relevant for the selection of external fund managers.

The guidelines set out in this section cover the governance issues relating to the selection, appointment and monitoring of external investment managers. The choice of whether to use an external investment manager depends on the resources available within the social security institution as well as views on the added value such an external manager can bring.

Where appropriate and permitted by the board, the investing institution may adopt an investment strategy that reduces its exposure to unwanted currency risk, while noting that, for some investments, potential currency movements may form part of the expected return and/or an extreme risk hedge and, therefore, should not be managed (or “hedged”).

Where appropriate and permitted by the board, the investing institution may take a direct equity or ownership stake in a publicly quoted, private or state-owned enterprise.

Such an investment may confer voting rights and permit the institution to influence directly certain activities of the organization in which it has taken part or, when there is full ownership, include representation on the board of a company or organization.

Sufficient procedures are put in place to ensure an appropriate level of operational due diligence is conducted on investing institutions.