MiFID II to affect UK pension schemes from tomorrow

With the implementation deadline less than 24 hours away, the Pensions and Lifetime Savings Association says it is essential that pension schemes are ready and fully understand the impact MiFID II will have on the way they invest.

Caroline Escott, Investment and Defined Benefit Policy Lead at the PLSA, commented: “Under MiFID II, schemes will have to deal with a vast range of changes affecting everything from the way in which research is paid for, to the disclosure of cost and best execution information. Although this poses challenges to pension schemes and trustees, which need to get to grips with what the new rules mean for them, it also offers an opportunity for in-depth consideration of the value of schemes’ fund management services. For instance, schemes could take advantage of the improved research cost transparency to assess where investment research adds value, or use the cost disclosures to improve their due diligence on managers and think about how to achieve better value for money.

“With the new automatic categorisation of LGPS funds as ‘retail’ instead of ‘professional’ clients, it is particularly important that this sector takes all the necessary steps to be ‘opted-up’ to professional status by their managers. Retail clients do not have access to some asset classes like infrastructure and schemes will need to opt-up as quickly as possible to ensure that their investment strategy is not adversely affected.”