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Mapped to the published PMI Award in Pension Trusteeship syllabus across 22 units and 91 topics

APT·ModuleINVESTMENT

Module 3: Investment for DB and DC Schemes

Module 3 covers what trustees need to understand about investing a pension scheme. It begins with the capital market and the major asset classes, overseas investment, specialised asset classes and methods, with-profit arrangements, and alternative assets and financial instruments. It then moves to strategy: asset allocation, the specialised techniques used in defined benefit schemes, the structure of portfolios, and how investment mandates are set and evaluated. From there it covers appointing and monitoring fund managers, fee structures, the charges that apply in defined contribution arrangements, performance measurement and custody, followed by responsible investment, stewardship and the Myners principles. The module ends with the Statement of Investment Principles, which ties the rest together. The APT tests understanding rather than the technical modelling an investment professional would carry out, and the syllabus marks some criteria DB only or DC only.

Units
5
Topics
25

What’s in it.

5 units

Frequently asked questions

4 questions
What is a Statement of Investment Principles?

The SIP is the written statement trustees prepare setting out the principles governing their investment decisions. It covers the kinds of investment held, the balance between them, risk and how it is measured and managed, expected return, the realisation of investments, and the trustees’ policies on financially material considerations, including environmental, social and governance factors and stewardship.

How often do trustees have to review the SIP?

Trustees review the statement at least every three years, and without delay after any significant change in investment policy. They take written advice from a suitably qualified person and consult the sponsoring employer, though the decision itself remains theirs.

What are the Myners principles?

They are principles for the governance of pension scheme investment decision-making that came out of the Myners review of institutional investment. They cover effective decision-making, clear objectives, an understanding of risk and liabilities, performance assessment, responsible ownership, and transparency and reporting. They are good practice rather than statutory rules.

How does DB investment differ from DC investment?

In a defined benefit scheme the trustees set a strategy for the assets as a whole, and the employer carries the investment risk against a promised benefit. In a defined contribution scheme the member carries the investment risk, so the trustees’ job is to select and monitor a fund range and a default arrangement suited to the membership.