The FT reports:
Large activist pension funds are to launch a campaign to shake up underperforming US companies, using new rules due to be agreed on Wednesday that allow shareholders to directly nominate board directors.
The proposal allowing investors to put their own nominees for board seats alongside the company’s nominees is expected to be approved by the Securities and Exchange Commission on a party-line vote, with three Democratic commissioners voting in favour and two Republicans opposing it.
This is long overdue in the States. And pension fund activism is long overdue everywhere.
Next on the agenda though is pension fund opacity — which is almost complete.
It baffles me why pension funds are almost wholly unaccountable for what they do and never send their members accounts. Why is that?
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If “members” of pension funds were all made shareholders in the company administering the fund then the powers vested in the shareholders, via the Companies Act, and the mechanism inherent in the AGM would (or should) allow the shareholders to dismiss all or any of the directors. It is the shareholders who own the Fund not the directors.
Pension Funds (and many other so-called “funds”) are “almost wholly unaccountable” because they are administered by people who are arrogant, far too often incompetent and almost always poorly “regulated”… More details on request.
Part of it may be that the mathematics used to make the pensions business work is the nearest mathematical relative to voodoo.
It is a matter of historical record – ask the guys at PCS headquarters – that when the first reform of the civil service pension scheme took place (the one that created Classic, Classic+ and Premium) the union was assured by all its departments bar one that interest in what was proposed was non-existent: about 95% of people elected to stay where they were. The one exception was a department with a large cohort of very, very high-powered mathematicians, who were actually able to see down the cracks in the legislation. That department’s union reps recruited their own team of financial advisers to services 2500 members – and that was equivalent to what the other 200000+ members had between them.
You’d have to have a very well-educated set of members to be able to hold the fund managers accountable.