UK pension giant’s stewardship report ‘not helpful at all’ to members, says CEO

Morten Nilsson, the CEO of the BT Pension Scheme, has said that the scheme’s stewardship reporting is “not helpful […] at all” for its members, as he criticised the burden placed on pension funds by overzealous reporting requirements.

Speaking at RI UK this morning, Nilsson said that BT – the biggest corporate pension scheme in the UK – put “a lot of effort into sending something effectively to the regulator”, and claimed that reporting requirements were “becoming an industry of themself”. 

While Nilsson strongly supported reporting requirements, and suggested that they should extend to all schemes, he urged the industry to “be sensible how we do this, because there’s a huge effort going into this and […] some of that effort could have been used for other stuff”.

Under new regulations due to come into force before COP26 later this year, UK pension schemes with assets under management above £5bn will have to report against the recommendations of the Taskforce on Climate-related Financial Disclosures, with the threshold lowering to £1bn in 2022.

The BT Pension Scheme has set a net zero target for its portfolio of 2035, enabled in part by the reinvestment of a large portion of its assets as beneficiaries retire.

Nilsson joined the scheme as CEO in 2018 following his departure from pension provider Now Pensions, which he founded in 2011. 

Other participants at the RI event warned that schemes should not become bogged down in reporting too much. John Chilman, CEO of RPMI Railpen, said: “Without disclosure there’s no basis for the action and realistically no way to tell if we’re going fast enough. However, there is a limited time on this as well; time and effort spent crafting reports and generating content without a need to get on with our action isn’t good enough, really”.

The Financial Reporting Council (FRC), which is responsible for the UK stewardship code, did not respond to requests for comment.

Update: Since publication, the FRC has provided the following comment

“The Stewardship Code asks asset owners such as pension funds and insurers to explain their actions to look after the assets in their care. They do this by reporting against specific Principles and expectations in a way that is appropriate to their role and size. The Stewardship Report, that they submit each year, allows flexibility for how this is presented and pension funds have the scope to incorporate what they consider members and beneficiaries would most value alongside the reporting requirements for the Code.

"Some asset owners have told us that they have found the Code to be a valuable framework to help them review the policies, systems and approaches they have in place for stewardship, and that reporting is a public demonstration of this. We recognise that some asset owners may take the decision to focus their resources on communicating directly to their members and agents, rather than reporting on their activities. We encourage all pension funds, whether or not they are signatories, to engage managers and service providers who are signatories to the Code.

 "We will continue to evolve the Code and reporting expectations over time, and invite pension funds to let us how their stewardship reporting could be most useful for their members, as well as what reporting from asset managers is of most value in supporting their decision making.”