UK - The government is seeking guidance from pension funds on whether to back the UK's corporate governance framework with legislation.
Schemes have until September 30 to respond to the department of trade and industry’s Rewards for Failure consultation document.
Trade secretary Patricia Hewitt said the paper explores a range of possible best practice and legislative options. “In response to continuing shareholder concern, this consultation explores whether further action is needed on the issue of directors’ contracts and severance.”
But the paper maintains that individual directors’ pay is a matter for companies and their shareholders.
NAPF chief executive Christine Farnish said: “We welcome the government’s interest in corporate governance issues, but further legislation must be avoided as the government has stated in the document.”
Farnish says pension funds are already seeing notable successes and is confident the voluntary system will take effect over time.
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Employers whose dividend to deficit recovery contribution (DRCs) ratios fall outside the "normal range" should expect to see higher regulatory scrutiny, although no fixed ratio will be set.
Investment consultants and fiduciary managers should expect a final decision on the investigation into the market to be published by the end of the year, the competition watchdog says.