UK - Legal & General Investment Management will provide index tracking services to Hermes pension management, it was announced today.

Following a strategic review of its passive business, the management company owned by the £38.3bn (€55.9bn) British Telecom pension scheme has decided to partner with Legal & General for index tracking.

Hermes announced in February it was looking at several options including in "actively investing in and growing its passive business" or seeking a partner.

Around 44% of Hermes' £69bn in assets under management was managed passively at the end of 2006.

Hermes noted it will continue to provide its corporate governance and stewardship services through Hermes Equity Ownership Services Limited ("HEOS").

In a separate announcement today, the National Pensions Reserve Fund (NPRF) appointed Hermes EOS to provide shareholder voting and engagement service.

This appointment is "a significant step" in the implementation of its responsible investment policy, the €20.7bn fund said.

Hermes EOS will execute proxy votes on the NPRF's behalf and will engage with companies on environmental, social and governance (ESG) issues across the fund's €15.9bn global equity portfolio.

The NPRF was a founding signatory of the United Nations Principles for Responsible Investment in 2006.  

"This appointment will help the NPRF become a more engaged shareholder in the companies in which it invests," said Michael Somers, chief executive of the National Treasury Management Agency (NTMA), which manages the fund as an agent of the NPRF Commission.