Monday 15 March 2021 3:28 pm

Asset managers keep pension trustees in the dark on holding companies to account

The trustees of the UK’s pension pots are being kept in the dark by asset managers on how they oversee their investments, according to new research.

Most asset managers were unable to provide details of how they exercised their voting rights or engaged with the companies they invest in, according to a survey by pension advisory firm Dalriada Trustees.

Of the 43 asset managers contacted by Dalriada’s service partner, Minerva Analytics, only one third were able to provide details of how they had used their influence in voting as investors. 

Some 28 per cent provided no information, while 40 per cent said there was no information to report.

Voting rights

The exercise of voting rights is a key way for pension trustees to ensure they are meeting their fiduciary duties to act in the best interests of their members.

This has become increasingly important when holding companies to account on the extent to which they meet environmental, sustainable and governance (ESG) goals. 

When it comes to engagement, asset managers are similarly lacking appropriate data required by pension scheme trustees, according to the survey.

Only 23 per cent of managers were able to provide detailed information on engagement they undertook, a further 19 per cent were able to provide partial information.

Meanwhile, 42 per cent of managers provided no information on engagement, while 16 per cent said that there was no information to report.

Annual statement

Trustees of both DB, DC and hybrid schemes are 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.

“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,” explained David Fogarty, director at Dalriada Trustees with responsibility for investments.

“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,” he concluded.