The pensions industry has been urged to “proceed with caution” when it comes to giving members’ the perception that they have voting rights on the shares in their pension schemes, with PTL warning that this could be a “dangerous illusion”.

PTL argued that whilst there is much attention being given to the “vitally important role” trustees play in stewardship, it is “far more complicated” when it comes to giving members a sense that they have a say in those votes.

In particular, PTL explained that most schemes invest in pooled funds, resulting in “two critical challenges” that are hard for trustees to overcome.

“First and foremost, due to intermediation, schemes rarely have ownership rights and are often several steps removed from the actual legal owner,” PTL MD, Richard Butcher, explained.

“Then there’s the issue of scale; a handful of schemes may command the attention of the managers, but the majority, in isolation, will not.”

He continued: “All of this means that the ability of most schemes to influence is pretty weak with the one “real” power, currently, being the threat to fire their manager – and it’s debatable how effective that is.

“In these circumstances giving members a sense they can influence a vote is a wrong and creates a potentially dangerous scenario that could give rise to member dissatisfaction.

"In a worst-case scenario it could lead to opt outs, a potentially disastrous unintended consequence that we need to do our best to avoid.”

Considering this, Butcher emphasised that whilst lots of work is being done on how to give trustees genuine leverage when it comes to voting, the “key part” is demonstrating to members that their investments are doing good things for the world, without giving them any “false illusion of power.”

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