The Financial Reporting Council (FRC) today published proposals to revise the UK Corporate Governance Code (click here) calling for responses by 28 February 2018. Pension schemes hold 57% of all institutional investment in the UK and the Pensions and Lifetime Savings Association which represents these funds has commented.
Luke Hildyard, Policy Lead for Stewardship and Corporate Governance, at the Pensions and Lifetime Savings Association said:
“The proposed reduction in the code from around 11,000 words to under 5,000 will be welcomed by both businesses and investors alike, and should enable better oversight of more focused governance standards.
“Despite the reduced length, the proposed code contains many positive new measures, particularly the recognition of the importance of corporate culture and employee voice.
"However, monitoring and enforcement of these provisions will be critical. PLSA research found that most companies already pay lip service to these issues in annual reports, but provide little concrete data demonstrating the strength of their relations with the workforce. For example, just 7% of the FTSE 100 report on their use of agency workers, 8% provide detail of their workers’ pay and benefits and only 21% provide figures on their investment in training and development.
“The proposals to require long-term incentive plans to be at least five years in length is welcome and will accelerate existing progress in this direction. However, the changes are unlikely to reduce levels of executive pay or address societal concern about gaps between executives and the wider workforce.
“While the code is rightly focused on principles rather than prescriptive requirements, there is also no mention of pension fund deficits or climate change – two long-term strategic issues with a profound impact on many companies that should perhaps be cited in relation to stakeholder relations, risk management or leadership.”
NOTES TO EDITORS
Lee Blackwell, Head of Media and PR, Pensions and Lifetime Savings Association
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Kathryn Mortimer, Press Officer, Pensions and Lifetime Savings Association
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Eleanor Carric, PR Manager, Pensions and Lifetime Savings Association
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We’re the Pensions and Lifetime Savings Association; the national association with a ninety year history of helping pension professionals run better pension schemes. Our members include over 1,300 pension schemes with 20 million members and £1 trillion in assets, and over 400 businesses. They make us the voice for pensions and lifetime savings in Westminster, Whitehall and Brussels.
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