Trustees' responsibilities and commission recapture

Abstract

This paper explains commission recapture and how participation in a commission recapture programme can improve investment returns of occupational pension schemes. This is particularly important in the light of the strict duty imposed upon the trustees of pension schemes, by both case law and statute, to maximise their investment returns. Although participation in a commission recapture programme may not be appropriate for every pension scheme, trustees' duties and responsibilities with regard to ‘investment functions’ do require them to consider such participation. Given the increasingly regulated and litigious environment in which they now operate, it is important for trustees to be able to demonstrate that they have properly considered every method of maximising investment returns. This is particularly the case for trustees of defined contribution schemes whose investment performance, if American experience is replicated in this country, will come under increasing scrutiny.