Pension trustees left in the dark by asset managers

Research reveals only a third of managers gave details of voting influence.

Trustees managing UK pension pots on behalf of savers are being kept in the dark by asset managers on how they oversee their investments, research claims.

This makes it harder for pension savers to understand how far their money contributes to environmental, social and governance (ESG) causes. It also makes it tougher for trustees to know if they are acting in the best interest of scheme members.

Research by Dalriada Trustees, one of the largest providers of independent professional trustee services to UK pension schemes, found only one third of asset managers could give details of how they had used their influence in voting as investors. 

Some 28% of the 42 surveyed provided no information, while 40% said there was no information to report.

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

Trustees of pensions schemes are required by law to create an annual implementation statement that outlines how their policies on exercising rights, including voting rights, and engagement with their investments have been undertaken.

This has become increasingly important when holding companies to account, particularly in terms of ESG goals. 

David Fogarty, director at Dalriada Trustees, says: “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.

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“Yet, we are in a position where we are receiving insufficient information from the asset management community. 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.”

Richard Butcher, managing director of trustee and governance services provider PTL, says: “Both trustees and asset managers need to do more to get access to this information.

“In our experience, there are asset managers who don’t do this either because they aren’t voting or don’t have a way of capturing the data or they haven’t shown any interest in developing this.

“Trustees now have an obligation to ask for this information and it is a consideration when hiring an asset manager.”

Jayna Bhullar, investment consultant at Quantum Advisory, says information disclosure has improved in recent years but has some way to go. For example, some asset managers are still building their infrastructure.