Review of court-awarded funds invested for protected beneficiaries
GAD has helped review the investment framework used to manage assets on behalf of children and protected beneficiaries through the Court Funds Office.
Credit: Scott Graham, Unsplash
The Government Actuary’s Department (GAD) has supported the Office of the Accountant General (OAG) with a review of the Strategic Investment Board (SIB) Framework. The Framework provides the structure for managing funds invested by the Court Funds Office (CFO) on behalf of children and protected beneficiaries who have received court awards.
The SIB, supported by the OAG, provides strategic direction on the investment profile of the underlying funds, fund manager appointment and performance monitoring.
Meeting a wide range of beneficiary needs
The Framework is designed to support 2 groups who have been awarded money by the courts: children and protected beneficiaries who require assistance with the management of their financial affairs.
Managing these assets presents a complex challenge. Beneficiaries may have very different circumstances, including the amount awarded, their age, how long assets are likely to be invested and whether they require a regular income or long-term capital growth.
The Framework aims to provide a straightforward and cost-effective approach while helping protect the value of assets over time. It seeks to balance the potential for investment growth with the risks that naturally arise when investing funds on behalf of beneficiaries with differing needs.
GAD’s role
GAD reviewed the existing Framework and made recommendations to the OAG on its future development. This included:
- reviewing the investment strategy
- assessing the balance between expected investment returns and risk
- considering how different factors, such as income requirements and beneficiary age, affect that balance
- advising on the merits and implications of extending the Framework to include additional asset classes
The Framework supports children and protected beneficiaries awarded money by the courts. Credit: Ben Wicks, Unsplash
Applying specialist investment expertise
This is a novel area of institutional investment, with characteristics that differ from more familiar settings such as pension schemes, charities and endowments.
Using its actuarial, investment and risk expertise, GAD modelled the existing Framework and analysed a range of alternative investment options. This enabled an assessment of the potential implications of different choices under a range of future scenarios, recognising that future investment outcomes are inherently uncertain.
This analysis informed a series of recommendations aimed at helping ensure the Framework continues to provide a consistent, equitable and flexible approach for beneficiaries in the future.
Chris Ward, Investment Lead who managed the project in GAD, said: “This project provided an opportunity to help our Civil Service colleagues assess whether the Framework continues to meet the needs of beneficiaries both now and in the future.
“Future investment performance is always uncertain, and this is where actuaries can add real value by helping organisations understand and assess these risks.
“We do not set policy, but it has been a privilege to provide impartial analysis and advice to support decision-making on the management of these assets.”
Supporting informed decision-making
The review helped provide assurance on how the Framework operates today and informed consideration of how it could evolve in the future. By combining actuarial modelling, investment expertise and risk analysis, GAD supported evidence-based decision-making in an area where achieving good outcomes requires careful consideration of a wide range of beneficiary circumstances.
This work demonstrates how GAD helps public sector organisations navigate complex financial risks and make informed long-term decisions.