While corporate practice is often in the firing line, the pension funds investing workers’ life savings are generally given a free rein. That may be about to change
Pension fund trustees are among the UK’s biggest investors, but a lack of meaningful connection with the assets they hold and the beneficiaries they are meant to serve has hampered accountability and transparency. An individual saver often knows little about the pension amassed in his or her name other than its annual value.
At the same time, the environmental, sustainable and governance (ESG) agendas espoused in many boardrooms today are too rarely reinforced by the powerful institutional investors who could be making a difference.
Now, however, campaigners and market analysts are calling for closer alignment between corporations and their pension funds in order to promote better sustainability. This, they argue, would ultimately drive up long-term financial returns without threatening the legal separation that has always been a necessary cornerstone of the relationship.
Mike Clark, director, responsible investment, at Russell Investments, argues that there are four key players in the pensions chain of investments.
First are “citizen savers”, or beneficiaries, who are those paying into a pension scheme. They are giving money to the second link in the chain, the asset owners – the pension fund trustees who are aggregating savings. They in turn give it to, thirdly, the investment managers (such as Russell)....