Home > Uncategorized > Havering Council pension funds still invested in tobacco companies – News – Romford Recorder

Havering Council pension funds still invested in tobacco companies – News – Romford Recorder

Havering Council pension funds still invested in tobacco companies – News – Romford Recorder.

to the tune of £1.7m apparently.  The most remarkable point in this Essex news story is the quote from their Cabinet member for value who states:

“It is important to remember that the council does not make the decision on where its pension investments are placed.

“This is down to the discretion of the expert fund managers who manage the pension fund.

“They are always asked to take into account ethical decisions but they should make decisions based on the economic sustainability of the fund.”

This appears to be a clear breach of duty by the council.   The pension fund trustees cannot opt out in this way as this extract from an ASH briefing paper shows:

It is common practice for pension funds to delegate day-to-day investment decision-making to external fund managers. However, this does not prevent them from instructing their fund managers in particular matters . Indeed, the law is quite clear that, although trustees may delegate their investment functions, they cannot delegate their fiduciary responsibilities.
Final responsibility for investment decision-making rests with the trustees themselves. The judge in Martin v City of Edinburgh stressed that trustees must “apply their minds separately and specifically to the question whether [the decision at hand] would be in the best interests of the beneficiaries.”  Moreover, in order to fulfil their fiduciary duties, the law requires trustees to monitor their fund managers on an ongoing basis. In other words, as FairPensions’ recent report concluded,  “It is a vital principle of fiduciary obligation that fiduciaries cannot outsource their obligation to think.”

 

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