UK - The £10bn British Coal Staff Superannuation Scheme is outsourcing its corporate governance functions to Hermes Pensions Management and urging others to follow suit.
The BCSSS and Hermes – which is owned by the BT Pension Scheme – have teamed up to launch The Equity Ownership Service, under which the fund manager will provide ownership and corporate governance overlay to the scheme’s £6bn equity portfolio.
BCSSS chairman Sheila Gleig explained that although the scheme took corporate governance seriously, it did not have the resources to deal effectively with the many issues and fund managers involved.
Hermes currently provides an integrated governance service to the BTPS covering both internal and external equity managers and this model has been adapted to cover BCSSS’s external equity managers.
Gleig believes schemes can boost the effectiveness of their governance efforts dramatically by working together with Hermes in this way.
In addition to launching EOS, she said the BCSSS was investing a total of £100m in Hermes’s UK and European equities funds.
Gleig said: “Aligning ourselves with another large shareowner maximises the power of both schemes to engage with firms and should provide a model for other pension funds.”
And Hermes deputy chief executive Charlie Metcalfe told PP that it was holding discussions with other large schemes about joining EOS.
Watson Wyatt European head of investment consulting Nick Watts welcomed the move.
He said: “We fully support the BCSSS initiative, particularly as it recognises this is an area of investment where schemes are likely to be more effective if they work together rather than on their own.”
The People's Pension, Atlas Master Trust and The Cheviot Trust have been granted authorisation from The Pensions Regulator (TPR), taking the total number of authorised master trusts to 18.
Pension schemes have been warned they may now face a more challenging legal test if they wish to fix drafting errors.
The Greene King Pension Scheme has appointed XPS Pensions as its actuarial and investment adviser following a competitive tender process.
Professional Pensions has compiled a list charting the progress of master trust authorisation. View our list in full here...