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Pension funds drive market for stewardship and raise expectations of their agents

26 November 2013

Launched today at the National Association of Pension Funds’ (NAPF) Annual Stewardship Conference, the ninth annual survey of pension funds’ engagement with investee companies shows continued growth in the desire from pension funds for good quality stewardship of their investments.  However, this does not appear to be mirrored in the pension fund adviser community.

Pension funds responding to the survey were nearly unanimous (96%, up from 93% in 2012) in their view that institutional investors, including themselves, have stewardship responsibilities that include engaging with companies and voting shares.  The perceived financial value of this is borne out by 82% of respondents agreeing that environmental, social and governance (ESG) factors can have a material impact on their fund’s investments in the long-term. Only 6% disagreed with this.

There has been a 30% increase in pension fund signatories to the Stewardship Code since the beginning of 2013.  The vast majority of responding funds had incorporated their stewardship expectations within their Statement of Investment Principles (SIP).  This clear understanding of their stewardship responsibilities is feeding through to their selection of asset managers - 71% of respondents indicated they take stewardship policies and activities into account when selecting asset managers.

The survey findings also indicated that other areas of the investment community are failing to demonstrate their commitment to the Stewardship Code. Only 25% of survey respondents were able to say that their investment consultants had raised the issue of stewardship with them this past year and in only 17% of those cases did respondents say that their investment consultants had suggested signing up to the Stewardship Code. 

Joanne Segars, NAPF chief executive, said:

“The vast majority of respondents to our survey believe good quality stewardship is important in protecting and enhancing the value of their investments. I am encouraged by the indications that the funds are continuing to embrace their responsibilities and drive a market for stewardship – I trust their investment managers will answer this challenge. 

“Three years on from the formal introduction of the Stewardship Code, it is time all those who have signed the Code support both its spirit and letter. Pension funds should be able to rely upon their key advisers to do so and therefore I urge the consultant community to reflect upon the evidence in our survey, which demonstrates the importance attached to stewardship by pension funds, and respond accordingly. ”

A full copy of the NAPF Engagement Survey 2013 can be found on the NAPF’s website.

Notes to editors:

1. NAPF fund members with more than £1 billion in assets under management were invited to give their views.  Responses were received from 48 pension funds, with combined assets under management of £394 billion. Of the types of funds that responded, the majority were large private sector occupational schemes (60%), 12 were local authorities, and the rest were largely from the public sector.  Where the number of respondents to a question was less than 48, the number is stated in the report.

2. The NAPF is the leading voice of workplace pensions in the UK. We speak for 1,300 pension schemes with some 16 million members and assets of around £900 billion. NAPF members also include over 400 businesses providing essential services to the pensions sector.

Contacts:

Lucy Grubb, Head of Media and PR, 020 7601 1726, [email protected]
Aimee Savage Richards, Press Officer (interim), 020 7601 1718 or 07825 171 446, [email protected]