Pension funds are unaccountable to savers

Pension funds are unaccountable to the savers whose money they invest, according to a report by ShareAction, the public campaign for the ethical investment of UK pension funds. 

Its Our money, our business report found that, although company directors are increasingly expected to be accountable to their shareholders, shareholders themselves, including pension funds, remain unaccountable.

It calls on savers to have new rights to information that will close the ‘accountability gap’ in the UK pensions industry.

The report’s recommendations include that savers should have the right to know:

  • Where their money is being invested.
  • How ownership rights are being exercised on their behalf.
  • Their pension scheme’s investment policy, including any policies on responsible ownership or ethical investment.
  • How the policy is being implemented.
  • How the scheme is managing future long-term risks to their money.

It also recommends that savers should have the right to participate by:

  • Being consulted on investment voting policies.
  • Attending annual meetings where they can question their pension scheme’s board.
  • Receiving a substantive response to queries about specific decisions.
  • Acting as a member representative on their pension scheme’s board.

Catherine Howarth (pictured), chief executive of ShareAction, said: “Through our pensions we are the true owners of some of the world’s biggest organisations, but savers aren’t listened to by their pension providers, even though many have pertinent views on issues like pay and environmental standards at the organisations in their pension fund

“From executive pay to payday lenders like Wonga, people have never been more interested in the behaviour of listed companies. But pension savers are shut out of the investment system and denied the opportunity to have their say.

“Giving savers a voice will help to rebuild trust in a broken financial system. Pension funds are a crucial link between finance, business and millions of ordinary people.”