PLSA and Investor Forum publish joint stewardship guide

The Pensions and Lifetime Savings Association (PLSA) and the Investor Forum have published joint guidance to help pension schemes assess the effectiveness of their asset managers’ delivery of stewardship.

The guide, Engaging the Engagers: A practical toolkit for schemes to achieve effective stewardship through their managers, aims to provide “practical insights”that can be used to ensure the effective alignment of the investment chain and enable asset owners to meet long-term obligations.

It includes a framework against which schemes are able to assess the quality of asset managers engagement and stewardship work; with asset owners able to “connect the dots” between asset managers, demonstrating the “value of effective stewardship” across their investment portfolios.

The PLSA stressed that whilst the issue of stewardship and engagement had been rising up the agenda for pension schemes, the majority still look to their appointed fund managers to carry out engagement on their behalf.

PLSA senior policy lead for investment and stewardship, Caroline Escott, added: “Policymakers, regulators and savers increasingly expect schemes to act as good stewards. Yet effective stewardship and engagement do not simply happen.

"Pension schemes can help ensure that engagement occurs and delivers value by articulating their expectations, working to encourage better activity by fund managers, and monitoring the effectiveness of delivery over time.

“Ultimately, a well-connected chain is likely to be much more effective in delivering engagement outcomes."

The guidance has outlined a number of “key questions” that schemes should ask asset managers to ensure they are effectively engaging with the scheme.

It also includes definitions of stewardship and engagement, and their application in different asset classes, an outline of how to frame pension scheme stewardship strategy, and a framework for understanding and distinguishing between different forms of engagement.

Investment Forum executive director, Andy Griffiths, emphasised that by focusing attention on the quality of engagement and the delivery of “tangible outcomes”, there is hope that the overall stewardship market will also be more broadly "strengthened".

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