STATEMENT FROM MERSEYSIDE PENSION FUND
Performance-related payments to Investment Managers
Mon Sep 28 2009
Latest internal figures indicate that, despite the current economic climate, since March 2009 the value of Merseyside Pension Fund has increased in value by approximately £500 million to above the £4billion mark. This is down to the successful management of the fund’s investments, which include stringent risk controls to ensure that there is limited exposure to any one type of asset, market, sector or stock.
The stewardship of Merseyside Pension Fund is not something that we take lightly and we can reassure scheme members that their pensions are expertly managed.
Investment managers are set rigorous and challenging performance targets which are carefully monitored. In respect of external managers used by the Fund, it is standard practice to include longer-term performance-related payments in their contracts, which are only payable if targets are significantly exceeded. This creates an important incentive, which is in the interests of the pension fund. In addition to this, the flat fee for a contract is less when a performance element is included. This ensures value for money and forms part of our legal obligation to maximise financial returns.
Merseyside Pension Fund voted against the remuneration policy at RBS, Lloyds and Barclays and a number of other UK companies where we believed that the overall level of remuneration, including bonuses, was excessive and not in the interests of shareholders. Our voting record proves that we have consistently opposed excessive short-term rewards for modest performance, rewards for failure and 'fat cat' packages. We are continuing to work with other like-minded shareholders to reform executive pay practices, particularly the so-called ‘bonus culture’ in the City.
