Defined contribution (DC) pension scheme members have little power despite shouldering all the risks to their savings and must become more involved in decision-making, according to Catherine Howarth, chief executive of investor advocacy group ShareAction.
Speaking at an event in London hosted by the World Pensions Conference and the Pensions Management Institute last month, Howarth said that while the ownership of assets has been democratised, members are largely insulated from the governance of their schemes and “that imbalance is not sustainable”.
She continued: “Members deserve a stronger voice in the governance of their capital. I don’t think this is sentimentality or idealism. I think it’s a foundation for legitimacy and long-term trust.”
In addition, DC members should have greater input into the appointment of those who run their pension schemes, said Howarth. She highlighted that examples of a greater alignment between governance and member priorities can be found in Denmark, Sweden and the Netherlands.
Several Australian superannuation funds are also using digital tools to crowdsource members’ views on stewardship themes.
“These aren’t abstractions – they’re proof,” said Howarth, “that participation of members works and that the UK is well-placed to learn from global peers.”
Howarth, a board member at Nest, said the master trust would hold its first “members’ assembly” in 2026 to deliberate on its responsible investment priorities.
“We expect to learn a great deal about what works, what doesn’t, and how deliberative structures apply in the context of a large pension scheme,” said Howarth.
“I hope it will give us a much richer picture of what matters to our members, insights on how to balance risk-adjusted returns with members’ interest in corporate behaviour and impacts and guidance that will feed directly into Nest’s triennial review of our statement of investment principles and help to shape our responsible investment priorities for the next few years.”
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