Pension funds are still reluctant to vote on executive pay, despite increased powers to do so, research by FairPensions has shown.

Almost three quarters (72 per cent) of institutional investors opposed government proposals to give them a binding vote on executive pay, while the final proposal of a binding shareholder vote every three years represented a compromise between the government aiming to empower shareholders and ‘institutional investors reluctant to assume these powers’, the report The Missing Link: Lessons from the ‘Shareholder Spring’ said.

The reasons for this 'lukewarm' support, said the report, fell into two camps. Some investors felt that engagement was already effective in aligning remuneration with shareholder interests, and that new powers were unnecessary. Others argued that the problem was not a lack of powers but the unwillingness of many institutional investors to use the powers they already had.

Pension savers also sent emails asking their fund managers to vote against excessive remuneration as part of the ‘Your Say on Pay’ campaign. In a sample of responses, the report found a third made no reference to remuneration while only one fifth provided information on votes.

FairPensions chief executive Catherine Howarth said pension savers in the UK often can not find information on how their fund voted on executive pay.

“As our report shows, even when savers take the trouble to ask their fund, the responses received are often inadequate and dismissive,” she said. “The government has handed additional powers to shareholders who are reluctant to use them. On top of this, we’ve found a missing link between pension investors and the savers whose money they look after.”

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