Industry downplays low number of scheme signatories to Stewardship Code

The FRC published the list of names today for the first time. The pension funds who signed up are: British Airways Pensions, Environment Agency Active Pension Fund, Lothian Pension Fund, Merseyside Pension Fund, Northern Ireland Local Government Officers’ Superannuation Committee, Railpen, The BBC Pension Trust, the BT Pension Scheme, USS and the West Midlands Pension Fund.

The Pension Protection Fund and Equitable Life are also among the list of asset owners who signed up.

Uksif deputy chief executive Adam Ognall said: “We would like to see more asset owners and it is crucial that they are involved more and more. Pension funds are key and it is important they send the right signal.”

However, he said he considered this level of endorsement as a good starting point.

Pension funds are thought to be in the process of assessing the code and what becoming a signatory would mean for them.

Colin Melvin, chief executive of Hermes Equity Ownership Services, said more schemes were likely to sign up once they assessed fund managers’ disclosures on their engagement with companies.

“The primary purpose of the FRC Stewardship Code is to encourage asset managers to disclose information which is useful to pension funds. Then the trustees can decide what to do,” he added.

The National Association of Pensions Funds (NAPF) – which expressed its support to the Code in September – agreed.

However, Emily Dellios, policy adviser at the NAPF, said the code recognised that fund managers are not solely responsible for monitoring company performance and pension fund trustees are strongly encouraged to report on how or if they have complied with the Code.

She added: "The NAPF recognises that implementation of the Code may not be straightforward for some pension funds, and we are encouraged by the number of funds who have already publicly declared their support.”

The Code received support also by international investors such as the California Public Employees Retirement Scheme (CalPERS) and the Australian Council of Superannuation Investors.

However, investment consultants, which play a very important role in advising schemes on their investments, are lagging behind, with Mercer being the only one who signed up to the Code.