Covering 30 April 2022 to 30 October 2023
1. Background
The Trustees of the Warner Howard Limited Pension and Life Assurance Plan (the “Plan”) are required to produce a yearly statement to set out how, and the extent to which, the Trustees have followed the Plan’s Statement of Investment Principles (“SIP”) during the previous Plan year. This statement also includes the details of any reviews of the SIP during the year, any changes that were made and reasons for the changes.
A description of the voting behaviour during the year, either by or on behalf of the Trustees, or if a proxy voter was used, also needs to be included within this statement.
This statement should be read in conjunction with the Plan’s SIP and has been produced in accordance with The Pension Protection Fund (Pensionable Service) and Occupational Pension Schemes (Investment and Disclosure) (Amendment and Modification) Regulations 2018 and the subsequent amendment in The Occupational Pension Schemes (Investment and Disclosure) (Amendment) Regulations 2019.
In December 2021, the Plan purchased a bulk annuity from Aviva with the remaining assets being held on Legal and General Investment Manager’s (“LGIM”) platform.
2. Investment Objectives and activity
The objective of the Plan is over the long term, to return the on-going funding level of the Plan to 100% of the projected past service liabilities and then to maintain the funding level at least at this level.
During the year, progress was reviewed as part of the formal actuarial annual updates. No formal manager selection or strategy decisions were made during the last Plan year.
The SIP was fully reviewed and updated on 30 September 2019 to incorporate the Trustees’ policy on Environmental, Social and Governance (“ESG”) factors, stewardship and climate change, as required under new regulations effective from 1 October 2019. The SIP was further updated after the reporting period end, on 29 September 2020, to further detail the Trustees’ arrangements with asset managers as required under new regulations effective from 1 October 2020.
3. ESG, Stewardship and Climate Change
The Plan’s SIP includes the Trustees’ policy on Environmental, Social and Governance (“ESG”) factors, stewardship and climate change. This policy sets out the Trustees’ beliefs on ESG and climate change, and the processes followed by the Trustees in relation to voting rights and stewardship. This was last reviewed in June 2022 during the Plan year.
4. Voting and Engagement
The Trustees are keen that their equity managers are signatories of the UK Stewardship Code, LGIM is a current signatory.
All of the Trustees’ holdings are within pooled funds and the Trustees have delegated to their investment manager the exercise of voting rights. Therefore, the Trustees are not able to direct how votes are exercised and the Trustees have not used proxy voting services over the year.
The Plan’s funds are:
DB Section
· LGIM All Stocks Gilts Index
· LGIM Over 15 Year Gilts Index Fund
· LGIM 5-15 Year Index-Linked Gilts Index Fund
· LGIM Over 5 Year Index-Linked Gilts Index Fund
· LGIM Investment Grade Corporate Bond – Over 15 Year – Index Fund
5. Description of Legal & General Investment Management’s voting processes
L&G uses Institutional Shareholder Services’ (‘ISS’) ‘ProxyExchange’ electronic voting platforms to electronically vote clients’ shares. All voting decisions are made by L&G and they do not outsource any part of the strategic decisions. L&G’s use of ISS recommendations is purely to augment their own research and proprietary environmental, social and governance (ESG) assessment tools.
To ensure their proxy provider votes in accordance with their position on ESG, L&G have put in place a minimum standards custom voting policy with specific voting instructions. These instructions apply to all markets globally and seek to uphold what they consider are minimum best practice standards which L&G believe all companies globally should observe, irrespective of local regulation or practice. In 2018, L&G updated their Global Principles document which sets out minimum standards for governance across all companies globally.
In addition, L&G have also set specific custom voting policies at an individual market level for those markets in which they adopt a stricter stance. All of L&G’s custom voting policies are developed in accordance with their publicly disclosed position on ESG in L&G’s Principles document and country specific policies.
L&G retain the ability in all markets to override any vote decisions, which are based on their custom voting policy. This may happen where engagement with a specific company has provided additional information (for example from direct engagement, or explanation in the annual report) that allows L&G to apply a qualitative overlay to their voting judgement.
L&G has strict monitoring controls to ensure its votes are fully and effectively executed in accordance with their voting policies by their service provider. This includes a regular manual check of the votes input into the platform, and an electronic alert service to inform them of rejected votes which require further action.