The minister for pensions Guy Opperman and the Occupational Pensions Stewardship Council (OPSC) have urged asset managers to give asset owners more say in voting at company annual general meetings.
Opperman and the OPSC, which promotes and facilitates high standards of pension asset stewardship, wrote to 44 asset managers to highlight how asset owners are excluded from voting decisions despite being in the best position to do so because they represent the interests of millions of pension savers.
The minister and the OPSC are urging fund managers to pay closer attention to pension schemes’ voting priorities. This can help schemes plan their strategies to reduce the risks to savings from climate change and to capitalise on opportunities in the net-zero transition. Today’s call to action recognises that schemes will want varying levels of control over the way votes are cast on their behalf.
Members of the OPSC have asked asset managers to ensure better communication with asset owners when it comes to representing their preferences and consider the voting policies of pension schemes and communicate on areas of misalignment before it is too late for asset owners to intervene. It also entails being open to and facilitating, voting on specific pre-agreed-upon resolutions based on their expressed opinion. Members of the OPSC have also asked asset managers to report on whether they are willing to discuss voting intentions with their clients.
The move follows the launch of the DWP’s Taskforce on Pension Scheme Voting Implementation (TPSVI) in December 2020, which urged asset managers to allow pooled fund investors, such as pension funds, to express their desire to vote on the assets in which they invest.
Opperman says: “This is about giving pension savers a voice in how their hard-earned savings are being looked after.
“I firmly believe the days of trustees leaving everything to asset managers without scrutiny must come to an end. We need to do more to improve pension schemes’ and asset managers’ stewardship, encouraging engagement with companies to ensure they are fit for purpose in the 21st Century.
“I see no reason why trustees shouldn’t be able to determine their own high-level policies – on areas such as climate risk management, diversity, or pay – and find an asset manager to implement it.”
Scottish Widows head of pension investments and responsible investment Maria Nazarova-Doyle says: “Asset managers are best placed to carry out the mechanics of voting, and only a small proportion of asset owners would be able to take on full voting responsibilities. However, asset owners are being left out of the decision-making process altogether.
“Receiving reports months after the voting has happened leaves no room for engagement and no ability to influence what action is taken within the billion-pound portfolios that the pensions industry is collectively responsible for. Stewardship, including engagement and voting, has the power to make a huge difference in the real world, be it on environmental issues, issues of social justice, workers’ rights and many more. Asset owners have a crucial role to play in being responsible stewards of this capital, and their voice has to be heard.”
Nest head of responsible investment Diandra Soobiah says: “We support this campaign. Whilst many of Nest’s investments are in segregated accounts, which allow us to set a voting policy and engage with our managers about voting decisions, we believe these options should be available to all. Pension funds should not need to change how they hold their assets to gain a voice.”
Natwest HR director NatWest Group and Trustee Director of the NatWest Group Retirement Savings Plan says: “As a founding member of the Occupational Pensions Stewardship Council, we support its ambitions to bring together the power of pension schemes to support purposeful investment.
“These proposed changes will help pension schemes play a more influential role in areas including shareholder resolutions, climate change and corporate governance.”
Tesco Pension Fund chair Ruston Smith says: “Voting and engagement are key enablers for pension funds to influence companies, in which they invest, to do the right thing and drive better outcomes for society, the planet and pension savers.
“Through the Occupational Pension Scheme Council, pension schemes are coming together to ask asset managers to continue to work even more closely with us by sharing information on voting and encouraging dialogue to create positive change.”
The asset managers written to are Abrdn, AEGON Investment Management, Alliance Bernstein, Allianz Group, Amundi Asset Management, Artemis Fund Managers, Aviva, AXA Group, Baillie Gifford, BlackRock, BMO, BNP Paribas, Columbia, DWS, Fidelity International, Goldman Sachs Asset Management, Hermes, HSBC, Impax Asset Management, Janus Henderson Group, JP Morgan, Jupiter, Legal & General Group, Man Group, MFS Investment Management, Natixis Investment Managers, Newton, Ninety One, Nordea, Northern Trust, PGIM, Pictet Asset Management Limited, Prudential, River and Mercantile Investment Management, Robeco, Royal London, Schroders, State Street Global, T. Rowe Price, UBS, Vanguard Group, Wellington, WHEB Investment Management and William Blair.
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