The Pensions Minister, Guy Opperman, announced the setting up of this new taskforce on 1st December 2020, so that occupational pension scheme trustees can properly exercise the voting rights attached to the assets they own.
He wants this new working group to examine the current, overly complex and archaic voting infrastructure as well as underinvestment in the stewardship function in fund management.
The general view is that, as it stands, pension scheme trustees who invest in pooled funds have effectively surrendered their rights to vote at the annual general meetings of the companies that they invest in.
The new working group or taskforce is to look at ways to correct this and, ultimately, improve trustees’ stewardship of their investments.
In his speech, the Minister stated that the new group will look at:
Although the taskforce will be supported by the DWP, it will be independent of it.
The Minister also announced that he’s taking forward a recommendation from the UK Sustainable Investment and Finance Association for a central directory of statements of investment principles (SIPs), as also supported by the Regulator. He was clear that “we urgently need to call time on SIP statements like ‘we leave it all to our fund managers’”.
He’s looking to the taskforce to support and advise on the development of voting policies for occupational pension schemes, along with further proposals for the better disclosure of votes in a standardised and comparable way.
The aim is to allow trustees and, ultimately, savers to see the quality of the service they’re getting.
Capita comment
This is another step in the steady improvement of investment and fund management governance and engagement that has been taking place over the last few years.
It’s obvious that the Government believes that trustees need to step up their practice to make it more professional.
They should take the opportunity to better understand the practical limits on engagement and stewardship of their fund’s assets and keep an eye on possible future developments. Trustees may wish to discuss this further with their investment advisers