Aggregate defined contribution (DC) assets have grown from £430bn (€467bn) to £471bn despite a challenging start to the year due to the COVID-19 pandemic, said the Pensions Policy Institute (PPI) and Columbia Threadneedle Investments.
The PPI, in association with Columbia Threadneedle Investments, launched the 2020 edition of theDC Future Book yesterday, which showed that 10.3 million employees had been auto enrolled by 1.7 million employers in the 12 months to the end of July 2020 – nearly twice as many employees as those recorded in 2015 (5.4 million).
The book, which was first launched in 2015, is an annual compendium of statistics that gives insight into the state of play of DC workplace pensions along with its likely direction of travel. It has been tracking DC membership rates, contribution levels, pot sizes, auto-enrolment milestones, investment allocation trends and much more.
It also disclosed that aggregate combined employee and employer contribution rates had increased from 4.5% to 7%.
Lauren Wilkinson, senior policy researcher at PPI, said: “This year’s edition of theDC Future Book shows a continuation of positive trends associated with automatic enrolment.”
She said that a further two million employees have been automatically enrolled compared to the same time last year and another 159,000 re-enrolled, while average contribution rates had also increased.
“Trends in access to DC savings have also continued, with most pots fully withdrawn, but a greater amount of money invested in drawdown products than was either fully withdrawn or used to purchase annuities. It will be crucial over the next year, and over the longer-term, to monitor how these trends evolve in response to the current COVID-19 pandemic,” she continued.
Nick Ring, CEO, EMEA for Columbia Threadneedle Investments, said: “Over the next few years companies will have to endure an extremely testing economic environment that not all will survive.
For DC pension scheme trustees, the challenge and opportunity lie in working with those asset managers that can uncover the pandemic’s long-term impacts and apply them to portfolios in order to manage risks and achieve sustainable long-term returns for their scheme members.”
PLSA publishes vote reporting templates to make sure stewardship duties are met
The Pensions and Lifetime Savings Association (PLSA) has today published Vote Reporting Templates to help pension funds, investment managers and platform providers disclose how they enact their shareholder voting rights.
Recent changes to UK law, which come into effect in October, mean pension fund trustees must demonstrate how they are acting as effective stewards of their assets. The PLSA said that an important way to demonstrate this is to disclose how they are using their voting rights to support or sanction corporate behaviour among their investee companies.
Importantly, the new regulations require trustees to disclose not only their own voting behaviour, but also the votes of investment managers acting on their behalf. The PLSA templates have, therefore, been published to help promote consistent and uniform reporting of this information.
Richard Butcher, PLSA’s chair, said: “Active ownership has a positive impact on corporate performance and the value of scheme members’ savings. Clear, consistent and relevant disclosure on voting behaviour is a vital part of delivering value.”
“Clear, consistent and relevant disclosure on voting behaviour is a vital part of delivering value”
Richard Butcher, chair at PLSA
The association has issued two different sets of guidance to accompany the templates: one for pension schemes and another for their underlying investment managers.
Many asset managers will need to adjust their systems and processes “to report voting information to their pension scheme clients in a relevant, consistent and repeatable way and it may take time to do so,” the PLSA said.
It is also encouraging trustees to be flexible in their requirements – particularly in the first year – and urging them to engage with their managers regarding what is possible.
The PLSA said the templates will prodive more consistent vote reporting at a mandate and fund level as trustees will be able to receive the information in the same format for every fund or manager – this will make it easier to disclose information in a consistent and repeatable format.
Trustees will also have information on voting which is more “decision-useful” and they will be able to better compare the service and approach provided by different managers, the PLSA said.
The PLSA added that the resource burden on managers will be reduced when it comes to providing voting information to trustees as they will not need to set up different systems and operations for producing different information for different clients.
Trustees that are signatories to the UK Stewardship Code will be able to use these disclosures to help meet their reporting requirements, it added.
The remplates ask trustees and investment managers to disclose details around voting policies such as a description of the voting process or use of any proxy voting services; the number of meetings eligible to vote at; the number of votes cast in total; the number of votes cast for, against and abstained; whether the manager voted contrary to the recommendation of any proxy advisor; details of the “most significant” votes cast; and information on how the manager has managed and mitigated any stewardship conflicts.
The Vote Reporting Guidance and Templates, part of the PLSA’s Investing for Good work programme, can be downloaded from the PLSA website.
Hymans Robertson new default strategy cuts carbon footprint
Consultancy Hymans Robertson has introduced a new default investment strategy to its staff pension scheme which it claims has reduced the plan’s carbon footprint by about 33%.
The launch of the new startegy sees the Hymans Robertson Pension Plan move from a contract-based to a master trust arrangement in the Legal & General Master Trust, the firm said.
Rona Train, chair of the fund’s governance committee, said the new pension arrangement will give their members better value and a projected higher income at retirement “in a more sustainable way”.
“We see this as the first step on our journey to a ‘net zero’ pension scheme over the coming years,” she added.
Steve Moore, head of HR at Hymans Robertson, added: “The move to the master trust arrangement is a really positive one for us as we can include our self-employed partners in the same scheme as our salaried staff.”
He noted that not many providers are able to offer this, but Legal & General was able to offer “this high quality and flexible pension plan for our staff”.
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