Your interview (Too many UK firms fall into foreign hands, September 24), reports that City minister Lord Myners would "summon" the National Association of Pension Funds (NAPF) to a meeting to discuss what he perceives to be a lack of resources – and therefore commitment – on the part of occupational pension funds to raise standards of corporate governance. We are always happy to discuss matters withMyners and will be happy to do so again.
The NAPF is, and always has been, an "active driver of effective ownership", as the minister is aware – we actively engage with investee companies and our corporate governance guidelines are used by a leading voting agency. We see this as an integral part of building value for, and providing pensions to, scheme members, which is, after all, what pension funds are there to do.
Pension funds' priority is to ensure that they are able to pay pensions to their members. This alone presents many challenging issues, especially in the current environment. Government policies have forced pension schemes to close and they grapple with ever-growing deficits out of UK equities – to the extent that pension schemes now own less than 15% of the UK market. It is ironic indeed, then, that government now wants to call on pension schemes to be the saviours of capitalism.
Constructive comment – not unwarranted criticism – is what is needed from government.
First thing, I'm not sure what the message is. If (ok - a big if) ownership activity is in funds' financial self-interest, as implied in para 2, how come it then appears to be contrasted with the 'proper job' of paying pensions, dealing with deficits etc in para 3?
Second, let's be absolutely clear about this - most private sector pension funds do diddley squat in this area. You can count the funds that make a serious go of it on the fingers of one hand just about. Anyone with any knowledge of the limited ownership activity by shareholders in the UK would tell you that the utter passivity of most pension funds is a big reason why more does not get done. If you think shareholders should act like owners, then arguably criticism of pension funds is actually pretty reasonable.