A U.K. pension voting task force is recommending to the Department for Work and Pensions that asset owners not be forced to draw up their own detailed voting policies to meet stewardship requirements but report on differences between their own policy and that of their fund managers.
The Taskforce on Pension Scheme Voting Implementation was set up by the U.K. minister for pensions and financial inclusion in December to address challenges around voting on equity shares by pension funds, such as issues with splitting the vote in pooled funds or manager approaches toward executing pension fund voting policies.
The task force found that few asset owners have set voting policies and instead many rely on their fund managers' policies, which are often found "wanting." For example, the task force found that 72% of managers have additional internal policies around voting that are not shared with clients.
However, effective October 2020, asset owners in the U.K. are required to vote on all shares and report on their voting activities in statement of investment principles annually.
Therefore to help investors meet their stewardship obligations, the task force recommended to DWP to allow pension fund executives not to set elaborate voting policies but instead demonstrate they can influence policies carried out on their behalf.
At the same time, fund managers should be required by the U.K. Financial Conduct Authority to disclose voting policies more fully to their clients, the task force said.
"We conclude that there is much to improve in terms of vote reporting and monitoring with action required from fund managers. We recommend that the Department for Work and Pensions promote a vote disclosure reporting template and that the FCA give guidance on a key set of aggregate data that asset managers should be required to report," the task force said.