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“Unacceptable”: Asset managers leave pension funds in the dark

pensions_votingAsset managers are keeping UK pension trustees in the dark on how they oversee their investments, research has suggested.

A study by Dalriada Trustees and Minerva Analytics found that the majority of asset managers were unable to provide details of how they engaged with investee companies.

The UK’s minister for pensions and financial inclusion, Guy Opperman, has said that it is “totally unacceptable” that fund managers are “unable or unwilling” to respond to information requests from pension funds. 

Out of 43 asset managers analysed in the study, only a third could give information on how they had used their voting influence as investors.

Nearly 30% provided no information at all, while 40% of asset managers said there was no information to report. 

David Fogarty, director at Dalriada Trustees, said: “As trustees, we need to be able to show members what action we are taking in terms of voting and engagement on the assets we govern on their behalf. 

“Yet, we are in a position where we are receiving insufficient information from the asset management community. We are seeing managers marketing funds for their ESG credentials, but they are failing to provide clear evidence of the actions being taken; clearly, this needs to change.”

When it came to engagement, asset managers were also found to be lacking the “appropriate” data required by pension trustees, according to the report. 

Under a quarter of managers provided detailed information on engagement while less than 20% were able to provide some details and over 40% provided no information. 

Trustees of both DB, DC and hybrid pension schemes are now required by law to create an annual Implementation Statement, which outlines how their policies on exercising rights, including voting rights, and engagement with their investments have been undertaken. 

David Crum, managing director, asset steward solutions at Minerva Analytics, highlighted that the newly-introduced requirement for trustees to create implementation statements is an “incredibly important” legal obligation. 

“At a time when many trustees and scheme members alike are worried about important issues such as climate change, it’s incredibly disappointing that the majority of asset managers appear to subscribe to the view that they cannot explain their policies, approaches and actions to their ultimate employers,” he said.  

Pensions minister Opperman said: “It’s totally unacceptable that fund managers are unable or unwilling to respond to reasonable requests from pension funds for information on how their votes were cast. 

“Pension fund trustees need this information to fulfil their statutory and fiduciary duties. Asset managers need to step up, use their votes and report efficiently. I will be closely monitoring progress.”

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