2 July, 2020 / Regulation

PLSA and Investor Forum publish practical stewardship guide

By Anna Fedorova

New guide to help pension schemes assess the stewardship efforts of their chosen asset managers

PLSA and Investor Forum publish practical stewardship guide

The Pensions and Lifetime Savings Association (PLSA) has joined forces with the Investor Forum to publish a new guide to help pension schemes assess the stewardship efforts of their chosen asset managers

The new joint guide, entitled Engaging the Engagers: A practical toolkit for schemes to achieve effective stewardship through their managers, provides a practical framework to help pension scheme trustees hold their asset managers to account on issues of stewardship and engagement.

In the guide, pension scheme trustees can find a comprehensive definition of stewardship and engagement, and how these can be applied to different asset classes.

The guide provides an outline of how pension schemes can frame their own stewardship strategies, an overview of what effective engagement looks like, and practical tools for understanding and distinguishing between different forms of engagement.

Additionally, it includes a list of suggested questions pension schemes can ask their asset managers to determine the quality of their stewardship and engagement efforts.

Caroline Escott, senior policy lead for investment and stewardship, PLSA said: “Policymakers, regulators and savers increasingly expect schemes to act as good stewards. Yet effective stewardship and engagement do not simply happen. Pension schemes can help ensure that engagement occurs and delivers value by articulating their expectations, working to encourage better activity by fund managers, and monitoring the effectiveness of delivery over time.

“Ultimately, a well-connected chain is likely to be much more effective in delivering engagement outcomes. This guide, produced in partnership with the Investor Forum, will gives asset owners a structured framework for engaging with their asset managers and setting and assessing the effectiveness of their stewardship strategy.”

The guide is intended for all types of pension schemes, from those that seek to deliver engagement directly themselves to those using external managers, though the latter is more common. The toolkit provided in the guide has broad application beyond the voting rights of equities, encompassing all asset classes.

Andy Griffiths, executive director of the Investor Forum, said: “We are delighted to provide this toolkit to assist PLSA members and other asset owners in examining and challenging the effective delivery of stewardship by their fund managers.

“By focusing attention on the quality of engagement capability and the delivery of tangible outcomes, we hope to strengthen the market for stewardship. This practical guide can help to put stewardship at the heart of the investment process for pension funds.”

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