TPR Doles Out £130,000 in Fines to Two Pension Violators

A British bus company and its managing director have been fined more than £60,000 ($83,560) for admitting to deliberately trying to avoid providing employees with pensions, according to UK watchdog The Pensions Regulator (TPR). It is the first UK firm to be sentenced for failing to enroll staff in a pension plan.

All UK employers are required by law to set up pensions for employees who meet certain eligibility criteria, and pay minimum employer pension contributions.

In November, the bus company, Stotts Tours, and its managing director Alan Stott, pled guilty to a total of 16 offenses of willfully failing to comply with the law on workplace pensions. On Wednesday, Brighton Magistrates’ Court ordered the company to pay a £27,000 fine, £7,400 in costs, and a £120 victim surcharge. Stott was ordered to pay a £4,455 fine and a £120 victim surcharge. This is in addition to the £14,400 in civil fines that the company already owes for failing to comply with the law on automatic enrollment.

Stotts Tours is also required to pay an estimated £10,000 in backdated pension contributions for its employees, as well as pay all ongoing contributions that are due, otherwise they will face further enforcement action from TPR.

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“Compliance with automatic enrolment remains very high and so it’s extremely disappointing that a tiny minority of employers continue to flout the law by denying their staff the pensions they are entitled to,” said Darren Ryder, TPR’s director of automatic enrolment in a release. “This case shows the cost to employers that failing to comply with automatic enrolment can bring—a bill of tens of thousands of pounds, a criminal conviction, and a damaged reputation.”

TPR has also fined the trustee of workplace pension provider NOW: Pensions £70,000 to fix long-running issues with the pension. The regulator said it required the master trust to act to resolve “persistent administrative failings,” over several years, which have led to some pension plan participants’ savings not being collected and invested.

The regulator issued trust manager NOW: Pensions Ltd. with an improvement notice, and a related notice known as a third-party notice. The notices require that the trustee complete a series of steps to remedy their administrative issues. The steps must be taken by specified deadlines over a number of weeks and months.

In November 2017, TPR fined the trustee £50,000 for failing to ensure that all employee and employer contributions were collected and invested promptly, and another £20,000 in January 2018 for failing to keep some members properly informed.

“This package of measures, together with those voluntarily taken by the trustee, should ensure that the issues with NOW: Pensions which have persisted for so long are finally resolved,” said Nicola Parish, TPR’s executive director of frontline regulation. “We will continue to monitor progress and will issue further fines if necessary to ensure that the trustee and NPL focus on resolving the issues as swiftly as possible.”

Tags: NOW: Pensions, Pension, Stotts Tours, The Pensions Regulator, UK

The Investment staff of the California State Teachers’ Retirement System (CalSTRS) has approved seven equity money managers who could receive a total of $1 billion for environmental, social, and governance-investment mandates.

But none of the managers have a lock on the money as the $225.3 billion pension plan expands its ESG program.

A CalSTRS press release says, “when the right investment opportunity presents itself, one or more of these managers are eligible to receive a commitment.”

Christopher Ailman, the chief investment officer of the West Sacramento, California-based pension plan, announced back in October 2016 that CalSTRS was expanding its approximate $1 billion ESG investment program. The system issued a formal solicitation for ESG managers with successful investment track records, attracting 20 applications.

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CalSTRS already invests $767 million with one of the managers eligible for a new allocation, CalSTRS data shows. That is Generation Investment Management, the London ESG firm co-founded by former Vice President Al Gore, who also serves as its chairman.

Generation invests in the stocks of companies globally that met sustainability standards for CalSTRS, but the pension plan is considering investing in a second ESG strategy with the firm, an Asia ESG strategy, the press release says.

Other firms selected as eligible for CalSTRS investments are Impax Asset Management Limited, which offers two investment strategies CalSTRS is considering, Impax Leaders and Impax Water.

The firm says in its website that Impax Leaders invests in companies which “see more than 20% of their underlying revenue generated by sales of environmental products or services in the energy efficiency, renewable energy, water, waste, and sustainable food and agriculture markets.” Meanwhile, Impax Water invests in companies “that provide or operate technologies, infrastructure and services for the supply, management, and treatment of water for industrial, residential, utility, and agricultural users,” the website says.

The others chosen, CalSTRS says, are Brown Advisory LLC for its Large-Cap Sustainable Growth strategy, Schroder Investment Management North America for its International Equity strategy, and Nordea Investment Management North America Inc. for its emerging Stars Equity strategy, which the money manager says on its website invests in companies in emerging markets that meet sustainability standards.

Hermes Investment Management Limited was also chosen for a Global Emerging Markets ESG strategy, Candriam Luxembourg S.C.A. for a Sustainable World Equities strategy, and Rockefeller & Co., Inc. for a Global Sustainability and Impact Equity strategy.

Rockefeller & Co. traces its beginnings to its operation as a family office for the Rockefeller family, its website says.

In addition to its existing relationship with Generation, CalSTRS has another $284.9 million invested with AGF Investments, a firm that invests in the stock of companies that are considered environmental innovators or leaders.

The selection of the managers eligible for the ESG-focused expanded equity program comes as investment officials presented its annual “green” report at the system’s Investment Committee meeting on Wednesday.

CalSTRS, the second-largest pension plan in the US by asset size, surpassed only by its Sacramento neighbor the California Public Employees’ Retirement System (CalPERS), is one of the first US pension plans to consider ESG in its investments.

Part of CalSTRS’ ESG efforts is pushing its external equity managers to incorporate ESG considerations into its stock selections. The report notes that in the fiscal year ending June 30, 2017, 66% of CalSTRS global ESG managers factored ESG criteria into their stock selection process compared to 56% a year earlier.

The report cities a key CalSTRS ESG initiative in 2017, the start of a $2.5 billion low-carbon index ESG strategy.

Not every CalSTRS initiative is resulting in larger ESG holdings. The CalSTRS ESG report noted that CalSTRS had $254.7 million in so-called green bond holdings in the fiscal year ending June 30, 2017.

The bonds that invest in environmentally sensitive projects amounted to $296.9 million as of June 30, 2016, shows CalSTRS’ prior green report.

CalSTRS spokesman Michael Sicilia told CIO that green bonds totals have been declining due to maturities, pay downs, etc. “We continue to be active buyers if the securities fit our portfolio needs,” he said.

Tags: Al Gore, CalSTRS, Chris Ailman, ESG, Generation Investment Management