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Pension funds must stop City bonuses hitting savers, says Lord Myners
9 Feb 2010City minister Lord Myners today urged pension funds to do more in demanding more stringent control on bonuses.
He told the National Association of Pension Funds that fund trustees and institutional investors had a “legal duty” to pensioners to protect their cash by asking for better standards from the financial services industry.
Lord Myners said there had been “significant shortcomings” and failures to take boards to task that had cost savers dearly, the biggest of which was in letting bonuses reach sky-high levels.
“We appear to have lost the ability to hold the boards of some public companies to account,” he said.
“In light of the recent financial turmoil and the sheer quantum of value destroyed by some governance shortcomings, I think it is fair to ask all participants in the investment chain to act in every way possible to prevent history repeating itself.
“You have a legal duty to your beneficiaries to protect the value of assets held in trust on their behalf and a duty to the businesses in which you invest. Shareholders need to meet their responsibilities as owners.”
The NAPF released a new governance code today to promote better engagement within the pension fund industry, but Lord Myners also called for an independent industry body to represent institutional investors.
A Bank of England report has suggested the taxpayer could have avoided having to bail out the banks. It said that if British bank pay had been reduced by 10 per cent between 2000 and 2007, it would have saved £50 billion in capital.
NAPF chief executive Joanne Segars said: “We recognise that stronger companies mean stronger pension schemes. Pension schemes remain committed to their role as responsible owners and to driving up corporate governance standards in the UK.”
She also called for more Government action on pensions: “We will support the Government in improving corporate behaviour, but we also need their help in supporting workplace pensions and we urge the Government to use its last Budget of this Parliament to provide the support they are crying out for.
Reader views (2)
I am not sure that there is a direct correlation between pension fund returns and bank pay. The rise in value of my pension was apittance before bank failures and since. Maybe the pension fund investors have their salaries linked to others in financial industry.
I also like teh comment about cutting bank employee pay by 10% would have built up a £50 billion fund. Wonder how much would be save off Gordon's budget if we applied a 10% cut to all public sector pay (including MP's).
- Ian, Maidstone, Kent, 09/02/2010 17:31
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...didn't this man make a fortune himself from running a pension fund. Whilst I agree the bonus culture needs addressing, perhaps he should first give back some of the bonuses HE made from pension funds before criticising others. Perhaps then he could speak with more authority.
- William, London, 09/02/2010 17:03
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