UK roundup: PIRC, Hammersmith, BAE, Tate & Lyle
UK - Revisions to the UK Corporate Governance Code requiring the annual re-election of directors of FTSE 350 companies has been welcomed by an independent corporate governance adviser, despite concerns from pension funds.
Elsewhere the London Borough of Hammersmith & Fulham is seeking an intra London pension administrator, BAE has appointed a third-party administrator and Tate & Lyle have confirmed the closure of its final salary scheme.
Following the publication of the revised UK Corporate Governance Code last week, the Universities Superannuation Scheme (USS) and Hermes Equity Ownership Services (EOS) both criticised the measure for potentially promoting 'short-termism'. (See earlier IPE article: Pension funds concerned over FRC call for annual re-elections)
However Alan MacDougall, managing director of PIRC, said: "In one sense this decision was always on the cards. If shareholders are going to act more effectively as owners then they need appropriate rights to facilitate that role. In our view annual elections are a reasonable quid pro quo for formalising investors' responsibilities under the proposed Stewardship Code. In addition it was clear that mainstream investor opinion had swung behind this reform."
PIRC noted it had been campaigning for companies to adopt annual elections since 1999 and claimed the reasoning provided by FRC for the change "is a very clear account of why such accountability is necessary, and why some of the arguments against reform lack merit".
Initially the four-year contract would look to provide pension administration to Hammersmith & Fulham and the London Borough of Brent. However the tender notice stated, "with the exception of Bromley, Hackney, Hounslow and the City of London Corporation it is the intention that the framework will be available to other local authorities to join".
The idea of an intra London, and potentially wider, framework was announced in January when the council highlighted its intention to search for an administrator ahead of the expiry of its existing contract with eth London Pension Fund Authority (LPFA). (See earlier IPE article: Hammersmith explores 'intra London' admin service)
Xafinity was chosen from seven bidders following a year long selection process, and it will now provide the schemes with administration services for over 200,000 employees.Sugar manufacturer Tate & Lyle has confirmed its final salary UK Group Pension Scheme will close to future accrual from April 2011.
The firm, which ad initiated a consultation with employees, claimed the closure and the decision to remove early retirement from November 2009 has allowed it to make savings of £42m (€50.4m) in the 2010 financial year.
Tate & Lyle provides pension schemes in a number of countries and figures from its annual results to 31 March 2010 showed the combined net deficit in these was £257m. This is an increase of more than £40m from the net deficit of £211m reported in 2009.