Policy clause

"No more than 5% in the employer's own investments": how to write it, test it and evidence it

Most UK occupational pension schemes may hold no more than 5% of their resources in employer-related investments, and no employer-related loans. A scheme's policy often repeats the limit. It becomes testable once the employer's group is mapped to the holdings; Acclimetry then bands that one issuer group against the whole scheme.

No more than 5% of the scheme's assets may be invested in employer-related investments.
Rule template
Sector, country and region exposure bands attribute_exposure

Questions to settle before it can be tested

  1. Employer-related: securities of the employer and of persons connected or associated with it, property they use, and loans to them. The holdings must carry the employer's group so the rule can find them.
  2. Of what: the regulation measures against the current market value of the scheme's resources, so the denominator is the whole scheme, not one mandate.
  3. Loans and exceptions: employer-related loans are barred outright, which needs its own prohibited-list rule; the regulations also list exceptions.
  4. Market moves: the measure is current market value, so a rise in the employer's share price can breach it without a purchase.

As a testable rule

Attribute exposure template, attribute issuer group, one band for the employer's group key: hard maximum 5%, warning maximum 4%, no exempt classes. Every holding must carry an issuer group, or a compliant reading is withheld. The concentration template would cap every issuer at 5%, so it does not fit this clause.

A testable wording

Employer-related investments (Pensions Act 1995, s40) may not exceed 5% of the current market value of the scheme's resources. The employer's group is listed in Annex D, and employer-related loans are not permitted.

The legal text is summarised in employer-related investments: the 5% limit; see also the statement of investment principles page.

Worked example

The employer's shares and its finance company's bond are one group: 2.7m of the 50m scheme, 5.4%, over the limit.

Rule template: attribute_exposure

attribute: issuerGroup
bands: group=NORTHGATE, hardMax=5, warnMax=4

Holdings
HoldingIssuerIssuer groupClassMarket value
Northgate Engineering plc ordinary sharesNorthgate Engineering plcNorthgate Engineering groupEquities1,900,000
Northgate Finance plc 5% 2031Northgate Finance plcNorthgate Engineering groupCorporate bonds800,000
UK Treasury index-linked 2040HM TreasuryHM TreasuryGovernment bonds14,000,000
Global equity fundGlobal equity fundGlobal equity fundFunds21,000,000
Corporate bond fundCorporate bond fundCorporate bond fundFunds9,500,000
Cash at custodianCustodian bankCustodian bankCash2,800,000
Result
GroupStatusValueBoundsHeadroom to the hard boundCode
NORTHGATE Breach 5.4% ≤ 5%
warning ≤ 4%		 -0.4%
-1.4% to warning		 ABOVE_HARD_MAXIMUM
  • ABOVE_HARD_MAXIMUM: The measured value exceeds the approved hard maximum, beyond any stated tolerance.

Largest contributors: NORTHGATE → Northgate Engineering plc ordinary shares 3.8%, Northgate Finance plc 5% 2031 1.6%

Computed at build time by the Acclimetry rule engine (backend commit 8197063); the same code runs in the product.

What each monitoring run records

Each run stores the employer-related weight, its state, headroom and the employer's holdings as contributors, with any unclassified weight disclosed. The trustees get a dated record of the employer-related share at every run. A breach opens a case like any other limit.

Sources

Updated: 13 October 2026Acclimetry · Foreranger Ltd