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Institutional Investment Policy Statement (IPS) Template

Governance and RACI, return target, risk budget, constraints, SAA ranges and benchmarks, rebalancing, manager watch list, ESG, hedging, reporting, breaches

Finance, Investissement & ComptabilitéCompletERISA s.404 and 29 CFR 2550.404a-1; UPMIFA s.3; UK SI 2005/3378 reg. 2; IORP II Art. 19, 25, 30; SRD II Art. 3g-3hinvestmentpolicystatementinstitutionalmath

Mode d'emploi: Use it when a pension plan, endowment, foundation or insurer needs its governing investment policy or a UK SIP / EU SIPP. Fill governance, objectives, risk limits and constraints first, then paste the SAA from the study. The main pitfall is an allocation copied from peers with no link to the fund's own liabilities and liquidity.

Aperçu

Investment Policy Statement (Institutional): [Fund or plan name]

The governing investment policy for an institutional asset owner: a defined benefit or defined contribution pension plan, an endowment, a foundation, an insurer's general account or a sovereign or public fund. It sets who decides what, the return objective, the risk tolerance and risk budget, the constraints, the strategic asset allocation with ranges and benchmarks, rebalancing, manager selection and monitoring, responsible investment and stewardship, risk controls, performance reporting and the review cycle. Based on the prudence and statement-of-policy duties in ERISA section 404(a) and 29 CFR 2550.404a-1 (US plans), UPMIFA section 3 (US endowments), the Pensions Act 1995 section 35 and the Occupational Pension Schemes (Investment) Regulations 2005 regulation 2 (UK statement of investment principles), Directive (EU) 2016/2341 (IORP II) Articles 19, 25 and 30 and Directive (EU) 2017/828 (SRD II) Articles 3g and 3h, as in force in October 2026. Replace every [bracketed] value and every row marked Example. This is a document format, not financial, investment, tax, legal or accounting advice. Obtain the standard or law for the normative text.

Document control

FieldValue
Document ID[IPS-001]
Fund or plan[Legal name of plan, trust, endowment or fund]
Asset owner type[DB pension / DC pension / Endowment / Foundation / Insurer general account / Public fund]
Jurisdiction and regulator[Country], [Regulator]
Base currency[EUR]
Version[1.0]
Status[Draft / Approved / Superseded]
Owner[@chief-investment-officer]
Approvers/reviewers[@board-chair], [@investment-committee-chair], [@investment-consultant], [@legal-counsel]
Adopted by[Board resolution or trustee minute reference] on YYYY-MM-DD
Effective dateYYYY-MM-DD
Next scheduled reviewYYYY-MM-DD (at least every [three] years and after any significant change)
Written investment advice obtained from[Adviser name and date of advice]
Employer or sponsor consulted[Yes, YYYY-MM-DD / Not applicable]
Last updatedYYYY-MM-DD
Classification[Public / Internal / Confidential]
Related documents[SAA study], [Responsible investment policy], [Proxy voting policy], [Funding policy], [Risk register]

Approvals

RoleNameDecisionDate
Board or trustee chair[Name][Approved]YYYY-MM-DD
Investment committee chair[Name][Recommended]YYYY-MM-DD
Chief investment officer or OCIO[Name][Reviewed]YYYY-MM-DD
Investment adviser (written advice)[Name][Advice given]YYYY-MM-DD
Legal counsel[Name][Reviewed]YYYY-MM-DD

Revision history

VersionDateAuthorChange
0.1YYYY-MM-DD[@author]First draft for investment committee
1.0YYYY-MM-DD[@author]Adopted by the board after SAA study [SAA-001]

Contents

1. Purpose and scope

This Investment Policy Statement sets out the policies that the [board or trustees] of [Fund or plan name] (the "Fund") follow when investing the Fund's assets. It exists to:

  1. Record the investment objectives, risk tolerance and constraints the board has agreed, and the reasons for them.
  2. Allocate responsibilities among the board, the investment committee, staff, the investment adviser, investment managers and the custodian.
  3. Set the strategic asset allocation, permitted ranges and benchmarks against which implementation is judged.
  4. Provide a written standard for monitoring, so that the board can show it acted prudently and can detect drift early.
  5. Serve, where required, as the statutory statement of investment principles or statement of investment policy principles (section 2).

In scope: [All assets of the Fund held in trust account [number], including the [defined benefit section], [operating reserve] and any assets held with investment managers or in pooled funds.]

Out of scope: [Member-directed DC investment options, which are governed by the [DC investment policy]; sponsor assets; administrative bank accounts below [amount].]

PoolPurposeMarket valueGoverning section
Return-seeking portfolio (Example)Close the funding deficit over timeEUR 594.0m7, 9
Liability-hedging portfolio (Example)Hedge interest-rate and inflation risk of liabilitiesEUR 464.4m7, 11
Liquidity buffer (Example)Pay benefits and collateral callsEUR 21.6m6, 11
Total (Example)EUR 1,080.0m

The three pools in the example sum to EUR 1,080.0m and correspond to the policy portfolio in section 7 (return-seeking: global equity, private equity and real assets; liability-hedging: investment grade credit and long government bonds; liquidity: cash).

2. Legal and regulatory basis

Status as of 2026-10. Check local law and the consolidated texts before adoption.

IDJurisdictionSourceWhat it asks of this document
LEG-001US (private-sector plans)ERISA section 404(a)(1) (29 U.S.C. 1104)Act solely in participants' interest, with the care, skill, prudence and diligence of a prudent person familiar with such matters, and diversify to minimise the risk of large losses unless clearly not prudent
LEG-002US (private-sector plans)ERISA section 402(b)(1)Maintain a funding policy; the IPS horizon and liquidity plan should be consistent with it
LEG-003US (private-sector plans)29 CFR 2550.404a-1, Investment duties (final rule of 2022-12-01, 87 FR 73822, effective 2023-01-30; some proxy-voting provisions in paragraph (d) applied later, from 2023-12-01: check the applicability paragraph)Base decisions on factors relevant to risk and return; rules for proxy voting and voting policies in paragraph (d). The Department of Labor announced in 2025 that it would replace this rule and a replacement proposal was sent for review in mid-2026: check the current text
LEG-004US (endowments, foundations)Uniform Prudent Management of Institutional Funds Act (UPMIFA, 2006) section 3, as enacted by the relevant statePrudence, diversification, reasonable costs and a list of factors to consider (economic conditions, inflation, tax, role of each asset, total return, other resources, distribution needs)
LEG-005UK (occupational trust schemes)Pensions Act 1995 sections 35 and 36Prepare and maintain a written statement of investment principles (SIP) and choose investments prudently
LEG-006UKOccupational Pension Schemes (Investment) Regulations 2005 (SI 2005/3378), regulation 2Review the SIP at least every three years and without delay after a significant policy change; take written advice; consult the employer; cover kinds and balance of investments, risks, expected return, realisation, financially material considerations, non-financial matters, voting and engagement
LEG-007UKSame Regulations, regulation 4Invest in members' best interests, diversify, keep unlisted assets prudent, use derivatives only to reduce risk or for efficient portfolio management
LEG-008EU (IORPs)Directive (EU) 2016/2341 (IORP II), Article 30Prepare a written statement of investment policy principles, review it at least every three years and after significant change, cover risk measurement, risk management, strategic asset allocation against the liabilities and how ESG factors are considered, and publish it
LEG-009EU (IORPs)IORP II Article 19Prudent person rule: long-term best interests of members, security, quality, liquidity and profitability, predominantly regulated markets, derivatives for risk reduction or efficient management, diversification, sponsor investment capped at 5% (10% for the sponsor's group)
LEG-010EU (IORPs)IORP II Article 25(2)Risk-management system covers asset-liability management, investment, liquidity and concentration, operational risk and ESG risks of the portfolio
LEG-011EU (institutional investors)Directive (EU) 2017/828 (SRD II) Articles 3g and 3h, as transposedEngagement policy and annual implementation disclosure (comply or explain); disclose how the equity strategy fits the liabilities and how manager arrangements create aligned incentives
LEG-012EU (IORPs and insurers)Regulation (EU) 2019/2088 (SFDR) Articles 3 to 5Publish sustainability risk policy, principal adverse impact statement or reasons for not considering them, remuneration consistency
LEG-013EU (insurers)Directive 2009/138/EC (Solvency II) Article 132Prudent person principle for the general account
LEG-014[Your jurisdiction][National pension or charity law][Requirement]

Where the IPS serves as a statutory statement (UK SIP or EU SIPP), keep the cross-reference table below up to date so the regulator or auditor can find each required item.

Statutory content itemSection of this IPS
Policy on choosing investments and prudence1, 3, 9
Kinds of investments and the balance between them7, 11
Risks, how they are measured and managed5, 11
Expected return4
Realisation of investments (liquidity)6, 8
Financially material considerations including ESG and climate10
Extent to which non-financial matters are taken into account10
Voting and engagement policy10
Arrangements with asset managers (incentives, horizon, costs, turnover)9, 13
Strategic asset allocation against nature and duration of liabilities7

3. Governance and responsibilities

Decision or taskBoardInvestment committeeCIO or OCIOAdviserManagersCustodian
Adopt and amend the IPSARCCII
Set objectives and risk budgetARCCII
Approve strategic asset allocationARCCII
Approve ranges and benchmarksARCCII
Hire and terminate managersIARCII
Rebalance within rangesIIA, RCCI
Vote proxies and engageIA (policy)R (oversight)CR (execution)C
Safekeep assets and record transactionsIICIIA, R
Calculate performanceIICCCA, R
Monitor compliance with this IPSIARCCC

R = responsible, A = accountable, C = consulted, I = informed.

Delegated authority. The board delegates to the investment committee the authority set out in [committee terms of reference]. The CIO or OCIO may, without prior committee approval: rebalance within the ranges in section 7; allocate between approved managers within an asset class; execute currency and interest-rate hedges within the limits in section 11; and redeem from a manager on the watch list when a termination trigger in section 9 is met, reporting at the next meeting.

Competence and training. Committee members complete [induction training] within [six] months of appointment and at least [number] hours of investment training per year. The committee assesses its own effectiveness every [year].

Quorum and records. A quorum is [number] members including [one] independent member. Every decision is minuted with the papers relied on, the advice received and any dissent.

4. Investment objectives

Primary objective. [Reach full funding on a [technical provisions / low-dependency] basis by [year] while keeping the probability of requiring additional sponsor contributions below the level in section 5.]

Secondary objectives.

  1. [Pay all benefits and expenses when due without forced sales.]
  2. [Outperform the policy benchmark, net of fees, over rolling five-year periods.]
  3. [Maintain an interest-rate and inflation hedge ratio within the range in section 11.]

Return target. The Fund's required return is the growth rate of the liabilities plus the excess return needed to close the deficit over the recovery horizon:

rtarget=rL+Δ,real target=1+rtarget1+π−1r_{\text{target}} = r_{L} + \Delta, \qquad \text{real target} = \frac{1 + r_{\text{target}}}{1 + \pi} - 1

where rLr_L is the liability discount rate, Δ\Delta the required excess return and π\pi expected inflation.

ParameterValueSource
Liability discount rate rLr_L (Example)3.20% a yearActuarial valuation as at YYYY-12-31
Required excess return Δ\Delta (Example)1.00% a yearRecovery plan [RP-001]
Nominal return target (Example)4.20% a year, net of feesCalculated
Expected inflation π\pi (Example)2.00% a yearCapital market assumptions
Real return target (Example)2.16% a year (1.042 / 1.020 minus 1)Calculated
Measurement horizonRolling [10] years, geometric, net of all feesPolicy

For an endowment or foundation, replace the liability rate with the spending rate plus inflation plus costs, for example a spending rate of [4.0]% plus inflation of [2.0]% plus costs of [0.6]%, and state the smoothing rule used by the spending policy.

5. Risk tolerance and risk budget

Ability to bear risk. [Funded ratio 90.0% on the technical provisions basis; sponsor covenant assessed as [strong] in [covenant review, date]; benefit outflows of about [3]% of assets a year; liability duration about [16] years.]

Willingness to bear risk. [The board accepts a lower expected return in exchange for a smaller chance of a deficit that would require contributions above EUR [amount] a year.]

IDRisk metricLimit or targetMeasured byFrequencyAction if breached
RB-001 (Example)Expected asset volatility of the policy portfolioNot above 10.0% a yearOCIO risk modelQuarterlyReport to committee; propose de-risking
RB-002 (Example)One-year 95% surplus value at riskNot above EUR 200mOCIO asset-liability modelQuarterlyCommittee review within [30] days
RB-003 (Example)Funded ratio floorNot below 80.0%Actuary roll-forwardMonthlyTrigger contingency plan with sponsor
RB-004 (Example)Interest-rate hedge ratio30% to 50% of liability PV01OCIOMonthlyRebalance hedge
RB-005 (Example)Liquidity coverage (liquid assets to 12 months of outflows and potential collateral)At least 3.0 timesCustodian dataMonthlyRaise liquidity
RB-006 (Example)Active risk (tracking error) of total fundNot above 2.0% a yearPerformance measurerQuarterlyReview manager mix
RB-007 (Example)Maximum drawdown tolerated before strategy review20% peak to troughCustodianMonthlySpecial committee meeting

Surplus value at risk at the 95% level over one year, as used in RB-002:

SVaR95%=(1.645 σS−μS)×A\text{SVaR}_{95\%} = \left(1.645\,\sigma_S - \mu_S\right) \times A

where μS\mu_S and σS\sigma_S are the expected value and volatility of the surplus return relative to assets AA. The method, assumptions and current values are documented in the Strategic Asset Allocation Study (finance/strategic-asset-allocation-study). In the example the recommended policy portfolio has σS\sigma_S = 12.22% and μS\mu_S = 1.86%, so SVaR is (1.645 x 12.22% minus 1.86%) x EUR 1,080m, about EUR 197m, within the RB-002 limit.

6. Constraints

ConstraintDescriptionEffect on policy
Time horizon[Multi-stage: closed to new members since [year]; benefit payments peak around [year]; end-game target [buy-out / run-off] by [year]]Limits illiquid assets as the plan matures
Liquidity[Net benefit outflows of EUR [32]m a year; potential collateral calls of EUR [40]m under a 1 percentage point rate rise]Keep liquidity buffer and daily-dealing assets per RB-005
Legal and regulatory[IORP II Article 19 limits; sponsor investment at most 5%; national quantitative limits if any]Section 11 limits
Tax[Fund is tax-exempt in [country]; withholding tax on foreign dividends reclaimed where treaties allow]Prefer vehicles that allow reclaim
Accounting[Sponsor reports the deficit under [IAS 19 / ASC 715]; volatility in sponsor accounts matters to the board]Supports a liability-hedging portfolio
Unique circumstances[Board decision to exclude [category]; sponsor-related property not permitted; member survey on sustainability]Section 10

Illiquid asset ceiling. Private equity, private credit, real assets and other assets without at least [monthly] liquidity may not exceed [25]% of total assets at commitment-adjusted value. In the example, the policy portfolio holds 8% private equity and 12% real assets, 20% in total.

7. Strategic asset allocation, ranges and benchmarks

The strategic asset allocation below was approved on YYYY-MM-DD on the basis of [SAA-001]. Targets sum to 100%.

Asset classTargetRangePolicy benchmarkRole
Global equity (Example)35%30% to 40%[Developed and emerging markets equity index, net dividends, 50% hedged to EUR]Long-term growth
Private equity (Example)8%4% to 12%[Public equity index plus 3% a year, lagged one quarter]Illiquidity premium
Real assets and infrastructure (Example)12%8% to 16%[Infrastructure or property index, EUR hedged]Inflation-linked income
Investment grade credit (Example)20%15% to 25%[EUR corporate bond index, all maturities]Income and partial hedge
Long government bonds (liability-hedging) (Example)23%18% to 30%[Liability benchmark or long EUR government index]Interest-rate hedge
Cash and liquidity (Example)2%0% to 5%[EUR short-term rate index]Liquidity and collateral
Total100%Policy benchmark: weighted sum

Capital market assumptions for these classes, the efficient frontier and the alternatives the board rejected are in the SAA study. With those assumptions the policy portfolio has an expected arithmetic return of 5.42% a year, expected volatility of 8.84% and an approximate geometric return of 5.03%, or about 4.58% after fees of about [0.45]%, above the 4.20% net target in section 4.

Currency. Target hedge ratio for foreign-currency exposure in [global equity: 50%; fixed income and real assets: 100%], range plus or minus [10] percentage points.

Benchmark changes. A benchmark may change only by committee decision with the reason minuted. Performance history is chain-linked, never restated.

8. Rebalancing policy

Method. [Range-based with quarterly review.] When an asset class is outside its range at month end, the CIO or OCIO rebalances it [to the target / halfway to the target] within [20] business days, using in order: (1) benefit cash flows and contributions, (2) futures or swaps overlays within section 11 limits, (3) physical transactions.

Exceptions. Private assets are rebalanced through the commitment pacing plan, not by sales. A range breach caused only by a private-asset valuation is reported but not traded.

Costs. Estimated transaction costs and market impact are recorded for every rebalancing trade above EUR [5]m.

StepValueCalculation
Total assets after equity rally (Example)EUR 1,120.0mCustodian month-end
Global equity actual weight (Example)41.0% (EUR 459.2m)1,120.0 x 41.0%
Upper range (Example)40%Section 7
Rebalance to target 35% (Example)EUR 392.0m1,120.0 x 35%
Amount to sell (Example)EUR 67.2m459.2 minus 392.0
Destination (Example)Long government bonds and cash, per current underweightsCIO decision log [RBL-014]

9. Manager selection, monitoring and termination

Selection. Every new manager or pooled fund passes investment and operational due diligence recorded in a Manager Due Diligence Report (finance/manager-due-diligence-report), covering: firm and ownership, team and key-person risk, process and its repeatability, performance and attribution, risk management, operations and valuation, compliance and regulatory history, cybersecurity and business continuity, responsible investment, fees and terms. The committee approves each hire with an Investment Committee Memo (finance/investment-committee-memo).

Arrangements with managers. Each investment management agreement or side letter states: the mandate and benchmark; guidelines consistent with section 11; reporting content and timing; voting and engagement expectations from section 10; fee basis; and the review horizon. To meet SRD II Article 3h where applicable, the Fund records how the arrangement aligns the manager's horizon and incentives with the liabilities, how performance and fees are evaluated over [three to five] years, and how portfolio turnover and turnover costs are monitored.

Monitoring. Managers report monthly holdings and quarterly commentary. The OCIO reviews each manager quarterly against the criteria below.

IDWatch-list triggerThresholdResponse
WL-001 (Example)Net excess return versus benchmarkBelow minus 2.0% a year over rolling three yearsPlace on watch list; full review
WL-002 (Example)Departure of a named key personAnyWatch list within [10] days; meet replacement team
WL-003 (Example)Style driftTracking error or factor exposure outside the agreed band for two quartersRequest explanation; watch list
WL-004 (Example)Regulatory or legal eventEnforcement action, material litigation, change of controlImmediate review
WL-005 (Example)Operational failureReconciliation break unresolved over [5] days, valuation error above [0.5]% of NAVOperational due diligence refresh
WL-006 (Example)Stewardship shortfallVoting record or engagement reporting not delivered or inconsistent with section 10Escalate under RI policy

Termination. A manager on the watch list for [four] quarters without improvement, or any manager with a critical operational or integrity failure, is recommended for termination. Transition is managed by [transition manager] with a documented pre-trade cost estimate and a post-trade report.

10. Responsible investment, stewardship and voting

Financially material factors. The Fund treats environmental, social and governance factors, including climate change risk, as investment risks and opportunities to the extent they are financially material over the Fund's time horizon. Managers must explain how they integrate them. For US ERISA plans, such factors are considered only where relevant to risk and return, consistent with LEG-003. For EU IORPs, the Fund describes how ESG factors are taken into account as required by IORP II Article 30 and publishes the SFDR entity disclosures (LEG-012).

Non-financial matters. [The board takes members' views into account only where it has good reason to think members would share the concern and the decision does not risk significant financial detriment.] [State the jurisdiction-specific test that applies.]

Exclusions. [List any exclusions and the reason for each: legal prohibition (for example, controversial weapons banned under national law), reputational, or financial.]

Stewardship and voting. Voting rights are exercised for all holdings where practicable. [Managers vote under their own policies, which the Fund reviews annually / the Fund votes under its own policy through [proxy service].] The Fund follows its Proxy Voting Policy (compliance/proxy-voting-policy) and reports annually in its Stewardship Report (finance/stewardship-report). Detailed beliefs, integration approach, exclusions, climate targets and escalation are in the Responsible Investment Policy (finance/responsible-investment-policy).

11. Risk management and permitted instruments

IDAreaPolicyLimit (Example values)
RM-001DerivativesPermitted to reduce risk or for efficient portfolio management (hedging, overlays, cash equitisation); not for speculative leverageGross notional of overlays at most 50% of assets
RM-002LeverageEconomic leverage only within the liability-hedging programmeTotal exposure at most 120% of assets
RM-003CounterpartyOTC derivatives only with counterparties rated at least [A-] under ISDA and credit support annex; daily marginingExposure to one counterparty at most 2% of assets after collateral
RM-004ConcentrationNo single issuer except governments rated at least [AA-] above a set share of assets5% per issuer; sponsor and its group 0% by board policy
RM-005CurrencyHedge per section 7Unhedged foreign currency at most 25% of assets
RM-006LiquidityLiquidity coverage per RB-005; collateral waterfall agreed with OCIOAt least 3.0 times
RM-007Securities lending[Permitted with indemnified agent; recall for votes on significant matters]On loan at most 15% of eligible assets
RM-008Prohibited[Direct commodities, short selling outside overlays, loans to the sponsor, assets the custodian cannot hold or value]Not applicable

Interest-rate and inflation hedging. The hedge ratio is measured as the PV01 of hedging assets divided by the PV01 of liabilities. In the example, liability PV01 is EUR 1.92m (EUR 1,200m x modified duration 16 x 0.01%); long government bonds (EUR 248.4m, duration 20) and credit (EUR 216.0m, duration 6) together supply EUR 0.63m (0.50 plus 0.13), a hedge ratio of about 32.6%, inside the RB-004 range.

Risk register. Investment risks are recorded in the Risk Register (compliance/risk-register) with owner, controls and residual rating, and reviewed with the committee [twice a year].

12. Performance measurement and reporting

Returns are time-weighted, calculated by [the custodian] monthly with daily valuation of liquid assets, and geometrically linked:

RTWR=∏t=1n(1+rt)−1,rt=Vt−Vt−1−CFtVt−1+wt CFtR_{\text{TWR}} = \prod_{t=1}^{n} \left(1 + r_t\right) - 1, \qquad r_t = \frac{V_t - V_{t-1} - CF_t}{V_{t-1} + w_t\,CF_t}

where VtV_t is market value, CFtCF_t the external cash flow in period tt and wtw_t the fraction of the period the flow was invested. Private assets are reported with money-weighted returns (IRR) and multiples as a supplement. Returns are reported gross and net of all investment fees.

ReportContentAudienceFrequencyDue
Investment dashboardAllocation versus ranges, funded ratio, hedge ratio, liquidity coverageCommitteeMonthly15 business days after month end
Performance reportTotal fund and manager returns versus benchmarks, attribution, risk metricsCommitteeQuarterly30 business days after quarter end
Manager reviewWatch-list status, due diligence updatesCommitteeQuarterlyWith performance report
Stewardship and RI reportVoting, engagement outcomes, climate metricsBoard, membersAnnual[Date]
IPS compliance certificateConfirmation of compliance or list of breachesBoardAnnual[Date]

Attribution follows the method in Performance Attribution Report (finance/performance-attribution-report).

13. Costs, conflicts and service providers

Costs. The Fund collects total cost data annually for every mandate: management fees, performance fees, fund expenses, transaction costs and custody. The target total investment cost is [0.45]% of assets a year, reported against peers [where data exist].

ProviderRoleAppointedFee basisNext review
Kestrel Bay Capital Europe (Example)OCIOYYYY-MM-DD[bp of assets]YYYY-MM-DD
[Custodian]Custody, accounting, performanceYYYY-MM-DD[bp plus transaction charges]YYYY-MM-DD
[Investment adviser]Written advice, SAA studyYYYY-MM-DD[Fixed fee]YYYY-MM-DD
[Actuary]Liability valuation and cash flowsYYYY-MM-DD[Fixed fee]YYYY-MM-DD

Conflicts. Board and committee members declare interests at each meeting. An OCIO that also manages underlying funds discloses which allocations go to its own products and the fees earned; such allocations need [independent adviser] review. Gifts and hospitality from managers above [amount] are recorded in the conflicts register.

14. Compliance monitoring, breaches and review

IDDateDescriptionTypeCureStatus
BR-001 (Example)YYYY-MM-DDGlobal equity at 41.0%, above 40% range after rallyPassiveRebalanced under RBL-014Closed
BR-002 (Example)YYYY-MM-DDManager bought a non-permitted security typeActiveSold within 3 days; guideline test addedClosed

Review cycle. The committee reviews this IPS at least every [three] years, and without delay after: a new SAA study; a change in funding level of more than [10] percentage points; a change in sponsor covenant, benefit design or law; or a change of OCIO or adviser. Each review takes written advice and, where required, consults the sponsor. The outcome is recorded in the revision history, even when nothing changes.

15. Glossary and references

15.1 Glossary

TermMeaning in this IPS
Funded ratioMarket value of assets divided by present value of liabilities
Hedge ratioShare of liability interest-rate (or inflation) sensitivity matched by assets, measured by PV01
OCIOOutsourced chief investment officer: a firm given delegated authority to implement the policy
Policy benchmarkWeighted combination of asset-class benchmarks at SAA target weights
PV01Change in present value for a 0.01 percentage point move in rates
SAAStrategic asset allocation: long-term target weights set by the board
SIP / SIPPUK statement of investment principles / EU statement of investment policy principles
SurplusAssets minus liabilities
Tracking errorAnnualised standard deviation of the difference between portfolio and benchmark returns
TWRTime-weighted return, which removes the effect of external cash flows

15.2 References

ReferenceVersion or dateUse
ERISA sections 402 and 404 (29 U.S.C. 1102, 1104)CurrentLEG-001, LEG-002
29 CFR 2550.404a-1 Investment dutiesFinal rule 87 FR 73822 (2022-12-01); replacement proposal pending as of 2026-10LEG-003, section 10
Uniform Prudent Management of Institutional Funds Act2006 uniform text, as enacted by each stateLEG-004
Pensions Act 1995, sections 35 and 36Check legislation.gov.ukLEG-005
Occupational Pension Schemes (Investment) Regulations 2005 (SI 2005/3378)Check consolidated textLEG-006, LEG-007
Directive (EU) 2016/2341 (IORP II)OJ L 354, 23.12.2016; transposition by 2019-01-13LEG-008 to LEG-010
Directive (EU) 2017/828 (SRD II)OJ L 132, 20.5.2017LEG-011
Regulation (EU) 2019/2088 (SFDR)As amended; SFDR 2.0 (Commission proposal COM(2025) 841) is a proposal and not law as of 2026-10: the European Parliament and the Council have adopted their negotiating positions and trilogue negotiations are under way; check the current statusLEG-012
CFA Institute, Elements of an Investment Policy Statement for Institutional Investors2010 (name only)Background reading
Related templatesThis libraryfinance/strategic-asset-allocation-study, finance/responsible-investment-policy, compliance/proxy-voting-policy, finance/stewardship-report, finance/manager-due-diligence-report

Standard and licence note

Based on public law: ERISA sections 402 and 404 and 29 CFR 2550.404a-1 (US federal works, public domain), the Uniform Prudent Management of Institutional Funds Act section 3 as enacted by US states, the UK Pensions Act 1995 and the Occupational Pension Schemes (Investment) Regulations 2005, and Directives (EU) 2016/2341 and 2017/828 and Regulation (EU) 2019/2088 (EUR-Lex, reuse with acknowledgement). Article and section numbers are cited and duties are summarised in original wording; no legal text is reproduced. The CFA Institute position paper on institutional IPS elements is named as background only; no content from it is used, and this template is not affiliated with or endorsed by CFA Institute. The structure and text are original. Check the current official versions, the consolidated texts and your national law before use, especially the pending US Department of Labor rulemaking and SFDR 2.0. This is a document format, not financial, investment, tax, legal or accounting advice. Template licence: MIT.

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