By Mohamed Ali Bernat The NAPF has published a comprehensive statement of corporate governance polic...
By Mohamed Ali Bernat
The NAPF has published a comprehensive statement of corporate governance policies to help build a closer relationship between pension funds as shareholders and the companies they invest in.
NAPF Investment committee chairman Alan Rubenstein said Government had taken a keen interest in corporate governance issues, looking to shareholders to play a more active part in ensuring boards steer their companies forward to achieve long-term shareholder value. He said: "In line with this aim, the Government has urged institutional shareholders to make greater use of their rights to vote." Rubenstein added that the NAPF has sought to assist pension schemes in making more effective use of their voting rights by providing timely information of forthcoming resolutions through its voting issue service (VIS).
The corporate government document notes that the range of issues on which boards must seek shareholder approval has expanded.
Tony Pryce, manager of the NAPF's investment department, said the organisation thought it sensible to gather the various policies and guidance notes together into one document.
He said: "Voting by institutions stands at somewhere around 50% with institutional investors most likely to follow board recommendations when they do come to tick the boxes."
Pryce echoed the words of the document when he said shareholders had a vital role to play in encouraging a higher level of corporate performance. Pension funds, as long-term investors, had significant exposure to and interest in the well-being of many of the companies which drive the UK economy forward.
He added that pension investors should take a greater interest in analysing AGM documents and getting back to boards to question their decisions.
Pryce said: "Sometimes companies might have a good reason for not complying with the code, especially over the short term, and this is why it helps to increase the level of communication between boards and investors."
He described the corporate governance guidance as a "living document" which would evolve when required by new legislation or recommendations.
Included in the document are references to and notes from the Companies Act 1985, Pensions Act 1995, Institutional Shareholders Committee (1993), recommendations of the Hampel Committee and Combined Code, and references to Association of British Insurers (ABI) and NAPF.
At the same time, the NAPF has also been working on creating a panel of industry representatives to help it achieve further Government awareness of critical pension issues. The association has brought together a panel of experts to help put across its arguments with greater authority.
NAPF Chairman, Alan Pickering, said that the combination of current members' practical experience of running schemes and investing assets would be perfectly complemented by the objective analysis of the academic panel.
He said: "This panel will help us punch our weight intellectually at a time when the social and economic importance of pension schemes are being recognised at home and abroad."
Members of the panel, which will meet on a regular basis from 3 July, will also apply their knowledge of all aspects of pension provision to help analyse proposals from Government and other sources.
The panel includes David Barr of Imperial College, Gordon Clark of the University of Oxford, Tom Congdon of Lombard St Research, Hugh Davies and Mike Orszag of Birkbeck College and Richard Disney of the University of Nottingham. Other members include Matthew Gaved, Publisher of Governance and Bill Robinson of PriceWaterhouseCooper.
An ambitious objective
'Something completely new'
'Illusion of control'
Reasons to be cheerful
Total investment reaches £9m