UK – Fund managers could indeed run the proposed National Pensions Savings Scheme at low cost using institutional management, according to the Investment Management Association.
“There are many fund managers geared up to provide investment management services, and competition in the institutional market already ensures that they can be delivered at low cost,” said IMA chief executive Richard Saunders.
Speaking at yesterday’s oral evidence session at the Work and Pensions select committee inquiry into pensions reform, he stated that the NPSS would have to function similarly to a large savings scheme.
“What we are talking about is no more nor less than an investment scheme,” said Saunders.
“And its important to realise that there is no need to set up an entirely new public sector system; systems which can make this work already exist in the private sector,” he added.
Saunders also stressed the importance of good governance and accountability throughout the scheme, and effective competition through a separation of the administration from the investment management functions.
According to an IMA spokesperson, “The two costs [for administration and investment_management] should be completely separate and shown completely separately.
“It’s important to run the scheme in the most cost effective and efficient way.”
According to the IMA, what remains an issue for government is how the money will be collected and administered.
In other news, the IMA today “exploded” the ‘culture of secrecy’ myth with its third annual survey of fund manager engagement with companies.
According to the results, there is near universal compliance with the industry’s statement of principles on shareholder engagement, and there has been increasing transparency about voting policy with more firms making detailed policy statements publicly available.
It added that, “overwhelmingly”, firms are reporting details of their voting and other engagement to the clients whose ownership rights they exercise. There has also been increasing publication on websites of voting at general company meetings.
The survey – covering 35 fund managers, representing 62% of UK equities managed in the UK – flies in the face of a report by the Trades Union Congress earlier this month stating it was to redouble its efforts to get institutional investors to disclose their voting records.
This followed a lower response rate to an annual TUC survey of fund managers’ voting behaviour.
According to Saunders, “This survey explodes the TUC’s myth of a ‘culture of secrecy’ in the asset management industry. Managers are following industry best practice guidance and becoming ever more transparent, both to clients, and in some cases publicly.
“The survey also exposes the bankruptcy of the Government’s attempts in the Company Law Reform Bill to impose a one-size-fits-all public disclosure of voting. The industry is evolving its own solutions without bureaucratic regulation. The Government should heed the House of Lords and forget about this retrograde idea.”