Managing more than £2trn of UK savers’ retirement savings, pension schemes wield significant power to influence investee companies to incorporate the highest standards of governance and to ensure their investee companies’ practices are appropriate to deliver value to the millions of pension savers they represent.
Put simply, pension schemes that govern well, including engaging fully with their stewardship responsibilities, perform better over the long-term.
Over several years the Pensions and Lifetime Savings Association (PLSA) has supported pension schemes with practical tools and guidance and have just published our 2025 iteration of our comprehensive Stewardship and Voting Guidelines to help asset owners exercise their vote on company resolutions and achieve effective stewardship through their investment managers.
The guidelines are updated every year to ensure they remain relevant in response to changing corporate culture, emerging behaviours and a constantly evolving regulatory environment.
This year, there are significant updates related to four key areas: artificial intelligence (AI); updated UK listing rules; climate change and sustainability; and social factors and the workforce.
Artificial intelligence
AI represents a significant technological leap and has started to change the investment landscape.
It has the potential to generate significant opportunities, but it can also generate risks for businesses, including the amplification of discrimination, proliferation of misinformation and privacy violations.
Our guidelines state investors should ensure companies are accountable for their social impacts by aligning with evolving industry good practice. It may be that AI and AI-enabled technologies will be subject to new standards and requirements in the future in order to promote safety, security and equity. When these standards and requirements arise, investors will need to ensure that companies are adhering to them.
Specifically, the guidelines encourage investors to ensure investee companies have implemented robust data anonymisation techniques when using AI.
More permissive UK listing rules
Political and economic developments continue to shape pension fund strategies. In the UK, the government's focus on achieving G7-leading growth and positioning Britain as a clean energy superpower has introduced regulatory changes, such as more permissive UK listing rules, that promote higher-risk investments to drive returns. Pension schemes must navigate these opportunities while ensuring stewardship practices safeguard long-term value and scheme member interests.
While offering votes on significant and related party of transactions is no longer required by the Financial Conduct Authority (FCA), we still see this as best practice. In our newly updated stewardship and voting guidelines, we recommend that investors should consider voting against the chair of the board if companies proceed with a significant or related party transaction without a shareholder vote in advance.
Climate change and sustainability
The climate change narrative in the guidelines has been revised to align with the Government's focus on sustainable finance. Considering our recent guide, ‘Nature's Impact', we have also updated our stance on biodiversity, aiming to place greater emphasis on integrating nature considerations into good corporate practices.
While there are no formal voting recommendations in this year's guide, it is an area we expect to increase in emphasis in years to come.
Social factors and the workforce
Social factors remain central to stewardship priorities. Meanwhile, workforce issues like diversity, income equality, and satisfaction are rising in prominence, driven by initiatives like the draft Employment Rights Bill and the Department for Work and Pensions' Social Factors Taskforce.
The 2025 Voting Guidelines introduce a section on maternity and paternity pay and leave policies. There is also greater emphasis on ethnicity and disability pay reporting, alongside gender pay reporting, especially in light of the Government's forthcoming legislation to mandate this.
As emerging risks in AI, cybersecurity, and biodiversity demand attention, the 2025 Stewardship and Voting Guidelines provide a vital framework to help schemes balance these complexities while fostering sustainable value and resilience.
Pension schemes are vital conduit to give savers a say in how their money influences company behaviour, ultimately improving the retirement outcomes of millions pension scheme members.
PLSA members can download the 2025 Stewardship and Voting Guidelines via the PLSA's member area.
Justin Wray is acting head of DB, LGPS and investment at the Pensions and Lifetime Savings Association
