Managers should sign PRI to pitch for £4-5bn annual UK pensions cash

Conservative Party amendment would put PRI at the heart of personal pension accounts.

Fund managers coveting the estimated £4-£5bn ($8-10bn) per annum in new UK pensions money to come on stream in 2012 under the proposed personal pension accounts system may have to make a clear commitment to responsible investment by signing up to the UN PRI, under proposals tabled by politicians from the UK opposition Conservative party.
In an amendment to the Pensions Bill, which will frame the rules for the new personal accounts, a group of politicians including Nigel Waterson, the Conservative opposition Pensions Minister, have proposed that fund managers should adhere to the PRI as part of their contractual arrangements to run assets for personal accounts.
The amendment suggests that the Personal Accounts Delivery Authority (PADA), which will manage the accounts, should require asset managers to address environmental, social and governance (ESG) issues in their investment policy statements. It also suggests that PADA should assess the capabilities of managers on ESG incorporation and ask them to report on this.
The Pensions Bill is the second part of reforms to the UK pensions system set out in the May 2006 PensionsWhite Paper: Security in retirement: towards a new pension system. Under the personal accounts system, UK employers will have to automatically enrol employees and contribute to a workplace pension scheme. The accounts are being designed as ‘simple, low-cost pension saving schemes’ aimed at moderate to low earners who currently do not have access to a workplace pension scheme. The Bill is expected to be passed later this year after debate on the proposed amendments. If passed, PADA will become one of the largest pools of pension assets in the UK in the coming decades. In a separate move, the Conservative party has also outlined proposals to establish a green trading platform on a similar line to the AIM small companies market. It said it would also promote the idea of green Individual Savings Accounts (ISAs) in a bid to make investments in environmentally sustainable businesses more attractive. Shadow chancellor George Osborne said the Green ISA (GISA), could offer a tax-free boost for savers investing in environmentally responsible companies. Osborne also launched a working group, led by former Norwich Union chief executive Patrick Snowball, to develop a costed proposal on how GISAs would work by next year.