Opperman launches pension scheme voting implementation taskforce

Pensions Minister, Guy Opperman, has announced the launch of the Taskforce on Pension Scheme Voting Implementation, which will examine issues faced by trustees implementing their own voting policies, particularly in relation to pooled funds.

Opperman announced the launch of the group at the Association of Member Nominated Trustees (AMNT) conference, having been prompted by recommendations outlined in the group's recent report, Bringing shareholder voting into the 21st Century.

The taskforce will be supported by the DWP, but will remain independent, and has been given a focused remit to consider potential solutions to voting system issues, and what regulatory measures may be needed to support this.

It has also been asked to support and advise on the development of voting polices for occupational pensions schemes, and further proposals for better disclosure of votes in a standardised and comparable way.

Opperman stated: “I’m grateful to the AMNT for this excellent new report, which sets out proposals for a new working group to examine the overly complex and archaic voting structure, under-investment in the stewardship function of fund management, transparency of voting policies and outcomes, and scheme specific reporting requirements.

“I’m pleased to announce the establishment of that group today, the taskforce on pension scheme voting implementation."

He continued: “This will be a task and finish group with a focused remit to look at how we facilitate the delivery of solutions to voting system issues, which overcome the present obstacles trustees implementing their own policies.

“Secondly, how we increase the number of asset managers who are prepared to engage with their client preferences and follow, or as a minimum, align and explain, on trustee voting policies, including pooled arrangements.

“Thirdly, whether they can recommend regulatory and non-regulatory measures to ensure the convergence of asset managers approaches to voting policy, in execution with trustees policies and preferences, especially in pooled funds.”

Opperman also confirmed the appointment of former UK Sustainable Investment Finance Association CEO, Simon Howard, as chair of the group, whilst Minerva Analytics CEO, Sarah Wilson, will join as vice chair.

In addition to this, the group will include representatives for the AMNT, with the rest of the membership to be announced “in due course”.

Discussing the reasoning behind the launch, Opperman explained that trustees are too often being asked to select funds in advance based on “vague and sometimes non-committal” voting polices and historic voting records, which are “opaque, inconsistent and sometimes incomplete”.

He stated: "It’s simple, the investment chain is very long, and at times very tangled, but ultimately you as pensions scheme trustees are the asset owners at the end of that chain, and when you act, the ownership chain is tighter.

"That means better governance, more sustainable value creation, and better outcomes for your savers."

In particular, he argued that the groups work could help make pensions greener and safer, explaining that by giving trustees a voice on voting, there will likely be a tougher pay on failure.

He also pointed out that pension scheme membership is more representative of the population than the asset management industry, stating that as trustees are ultimately accountable to their savers, they are going to be "much better at pressing forwards".

Opperman stated: “We will get more engagement, better stewardship, better outcomes, and a stronger economy, where asset owners who want to have a voice are able to speak up, however they invest, including in pooled funds, rather than be supressed.

“I’m determined that this does work, and I believe that it will.

"I realise that we could all sit back and do nothing and one firm could emerge with some great innovation to make voting in pooled funds a practical reality, but I do not think it is right to sit back.

“Longer term we need more than one or two firms to come forward, I accept that the market will provide innovative solutions, but if we are to make it happen, trustees need to use their buying power now."

Opperman invited trustees to tell advisers that they plan to switch to a fund manager that will honour their policy, unless similar flexibility is granted at pace by the current manager.

He stated: "I’d invite you not to take no for an answer. Don’t tell me that the consultants won’t sign off unless you pay them handsomely to certify that a more effective voting policy is in member interests.

"Actually do tell me, and I will tell the whole world."

AMNT co-chair, Janice Turner, added: “The establishment of the taskforce is a huge step forward and I am proud that AMNT's Red Line Voting Campaign helped to alert the minister to the problem."

“The appointment of Simon Howard as chair and Sarah Wilson as vice-chair demonstrates just how seriously the minister wants to see a resolution to the current situation.

“The taskforce has been asked to recommend ‘regulatory and non-regulatory measures’ to solve this issue, so it will have real teeth.

“The current situation, where trustees are disenfranchised as fund managers ignore their wishes and frequently take weak or contrary positions cannot continue. It is not right, it is not fair and it is in conflict with the regulatory requirements placed upon trustees.

“We believe that the barriers presented by fund managers to split voting in pooled funds are not insurmountable and we are confident that by working together on the taskforce we should be able to reach a more equitable position for all."

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