The Taskforce on Pension Scheme Voting Implementation (TPSVI) has made 24 recommendations to improve both the frequency and quality of company votes made by occupational pension schemes.
This comprehensive report outlines the context and key problems when it comes to pension scheme voting, before setting out the steps an asset owner might take in setting a voting policy. This part includes the key recommendations that will support the changes in behaviour needed from service providers to meet this objective.
The taskforce noted that few owners have set voting policies, and instead rely on fund manager policies, which it says are “often found wanting”.
In the consultation the TPSVI found that 72 per cent of manager has additional internal voting policies which are not shares with clients.
The TPSVI makes a number of recommendations which includes the fact that schemes need not set a voting policy, but must take and demonstrate “ownership” of the policies carried out on their behalf, and that fund managers should disclose policies more fully.
In terms of implementation it recommends that fund managers of pooled funds should voluntarily offers investors the opportunity to set “expressions of wishes” to address the issue that “savers who bear the risk have a right to understand and have a say over the stewardship of their assets.”
The TPSVI is also asking the Financial Conduct Authority (FCA) to confirm the legality of aspects of this process.
In respect to reporting and monitoring the TPSVI note there is a “mix in quality in current practice and a lack of consistency in who defines ‘significant vote’ for implementation statements.”
It adds: “We conclude there is much to improve in terms of vote reporting and monitoring with action required from fund managers.
“We recommend that the DWP promote a vote disclosure reporting template and that the FCA give guidance on a key set of aggregate data that asset managers should be required to report.
“More broadly, we suggest that the Occupational Pension Schemes Stewardship Council help pension schemes in the stewardship of service providers and the Department for Businesses, Energy and Industrial Strategy (BEIS) bring forward proposals to lower the thresholds for filing shareholder resolutions as recommended by the Asset Management Taskforce.”
Becky O’Connor, head of pensions and savings at Interactive Investor says: “In a world where people care more than ever about global issues like climate change, it’s high time pension savers were able to have more of a say in where their pot of money goes.
“Thanks to campaign work, the penny has dropped for millions of workers that the money they pay into their pension every month is invested on their behalf, but not always in a way they would wish.
“The set of recommendations from the TPSVI joins up the increase in awareness with suggestions for ways to turn views into action. The report recognises the importance of voting rights as well as acknowledging some of the potential challenges for the industry in implementing it. If implemented, these recommendations could, over time, transform the way people engage with their pension, from a passive relationship to an active, empowering one.”