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Failure to monitor funds leaves savers unprotected

Insurers’ unwillingness to regularly monitor the funds they invest in leaves savers in contract-based pensions “ill-served and poorly protected”, according to responsible investment charity FairPensions.

Research by the charity, published last week, is based on a survey of the UK’s 10 biggest contract-based pension providers.

It says Aviva is the only insurer that has signed the Financial Reporting Council’s UK stewardship code, which sets out good practice on engagement with investee companies.

Legal & General is the only company that confirmed it requests reports from external fund managers on voting activity while none of the respondents says they ask for reports from external managers on their engagement activity with investee companies.

The other insurers that make up the top 10 include Aegon, Friends Life, Prudential, Scottish Life, Scottish Widows, Skandia, Standard Life and Zurich.

FairPensions also accuses insurers of a lack of transparency in socially responsible investment funds, with only the top 10 holdings disclosed on all the providers’ websites.

It says: “The unwillingness of insurance companies to monitor managers leaves contract-based pension holders ill-served and poorly protected.”

The report recommends insurance companies should publicly disclose how they deal with environmental, social and governance issues, issue a statement of compliance with the UK stewardship code, monitor the voting and engagement activities of both internal and external asset managers and publicly disclose voting and engagement records and become signatories to the UN Principles for Responsible Investment.

The Association of British Insurers declined to comment.

Keyte Ltd director Robin Keyte says: “Providers need to make a lot more effort to work out what policyholders want and deliver an effective strategy.”



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