The National Association of Pension Funds (NAPF) Engagement Survey 20081 shows that large UK pension funds (with over £1 billion in assets) are increasing their influence on the companies they invest in.
Social/Environmental policy: 68% of funds reported making an impact on social/environmental policy - up from 51% in 2007
Pension funds hold 13% of UK shares2 and the NAPF’s annual survey figures show that, on average, 25% of pension fund assets are invested in UK equities.
Launching the survey, David Paterson, NAPF Head of Corporate Governance, said:
“Large pension funds, as major institutional shareholders, are clearly making their voices heard in UK companies. We believe that high standards of corporate governance contribute to the long term success of a business and thus help generate the good investment returns which are essential for the health of pension funds.”
Survey Details:
Statement of Principles: A majority of pension funds’ Statements of Investment Principles refer to the ISC Principles3 (45%) or expect to do so in the next two years (34%). One third (33%) of respondents said that the Principles had been incorporated into their contracts with all investment managers, either directly or by side letter. Eight out of the ten largest funds that responded said that they had incorporated them for either all managers or some managers.
Reports and disclosure: Over three-quarters (77%) of respondents receive one report per manager per quarter and 60% receive reports on other engagement activities.
A majority (54%) of pension funds disclosed their general policy on voting and 24% reported some disclosure of voting specifics.
Responsible Investment and corporate governance policy: Two-thirds of pension funds said that Corporate Social Responsibility influences the selection of investment managers and consultants now (32%) or expect it to in the future (34%). 72% of funds have their own policies governing responsible investment. The time and money spent by funds on CSR has increased with 83% saying they spend more time and money than they did when the ISC Principles were introduced in 2001.
Impact of engagement: Pension funds are increasingly seeing the impact of their engagement activities on the companies in which they invest.
Table 1: percentage of pension funds reporting changes in investee companies due to their engagement activities
| | 2007 Survey | 2008 Survey |
| Board Membership | 67% | 74% |
| Company Strategy | 57% | 69% |
| Renumeration Policy | 74% | 79% |
| Social/Environmental Policy | 51% | 68% |
ENDS
Notes to editors
1. The NAPF’s 2008 Shareholder Engagement Survey is available on the NAPF website.
The NAPF surveyed pension funds with more than £1 billion under management and received responses from 53 pension funds with combined asset holdings exceeding £300 billion.
2. ONS figures available from http://www.statistics.gov.uk/pdfdir/share0707.pdf
3. The Institutional Shareholders’ Committee Statement of Principles on the responsibilities of institutional investors and their agents was first published in 2002 and was refreshed in 2005. Its framework for voting disclosure was published in summer 2007.
About The National Association of Pension Funds Limited
The NAPF is the leading voice of workplace pensions in the UK. We speak for 1,200 pension schemes with some 15 million members and assets of around £800 billion. NAPF members also include over 400 businesses providing essential services to the pensions sector.
Journalists requiring further information, please contact Ruth Wharram via
020 7808 1345 ruth.wharram@napf.co.uk 07825 171 446
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