Pensions Minister, Guy Opperman, has written to 44 asset managers to encourage them to allow asset owners, such as pension schemes, to have more say when it comes to voting at company Annual General Meetings.

Alongside this, members of the Occupational Pension Scheme Stewardship Council (OPSC) have also sent a letter calling for "better and more open, honest communication with clients about voting" from asset managers.

Both letters have suggested that asset owners too often are not included in decision making on voting, despite them being ideally placed to do so as they represent the interests of millions of pension savers.

In light of this, they have called on fund managers to pay more attention to the voting priorities of pension schemes, suggesting that this could help pension schemes reduce risks from climate change and to make the most of net-zero transition opportunities.

“This may include taking into account clients’ voting policies, and communicating back areas of misalignment in a timely manner," the OPSC letter explained.

"Given the direction of travel, it also means being open to, and facilitating, voting on specific pre-agreed resolutions according to the client’s expressed view."

Signatories to the OPSC letter, which has requested a response by 24 January, include the Brunel Pension Partnership, BT Pension Scheme, the Pension Protection Fund, Lothian Pension Fund, Scottish Widows and the Tesco Pension Scheme.

Opperman's letter, meanwhile, drew attention to two key recommendations from the Taskforce on Pension Scheme Voting Implementation (TPSVI), published in September 2021, which are specifically directed at asset managers.

This included the recommendation for asset managers to offer pooled fund investors the opportunity to set an expression of wish regarding voting undertaken on the assets within the funds in which they invest.

Opperman urged asset managers to join those already bringing forward products that do not require trustees to switch to a segregated mandate in order to express their wish on voting.

“I am keen to monitor progress on this matter carefully, as the TPSVI recommended that, if adoption by managers is slow, then the issue should be referred to the Law Commission to propose structures that give owners the necessary rights,” he stated in the letter.

The minister also drew attention to the recommendation that asset managers and trade bodies should sign up to the principle of answering all reasonable requests on their voting and stewardship activity, requesting an update on asset managers’ plans in light of this.

“This is about giving pension savers a voice in how their hard-earned savings are being looked after," he commented.

"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."

Opperman has previously expressed disappointment at the level of stewardship action being taken by pension schemes, emphasising the importance of this in combatting climate change.

Indeed, Scottish Widows head of pension investments and responsible investments, Maria Nazarova-Doyle, also highlighted stewardship as having 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".

She continued: “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.

“Asset owners have a crucial role to play in being responsible stewards of this capital and their voice has to be heard.”

Adding to this, Nest head of responsible investment, Diandra Soobiah, argued that pension funds should not to need to change how they hold their assets to gain a voice.

"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,” she said.

Share Story: