Pass-through voting adoption by asset owners experiences a substantial rise of 175%
Bedfordshire Pension Fund Adopts Pass-Through Voting, Signaling Shift in Asset Ownership
The Bedfordshire Pension Fund has taken a significant step forward by adopting pass-through voting, a practice where asset owners directly exercise voting rights on their investments. This shift, which has led to a noticeable increase in pass-through voting uptake by asset owners by 175%, highlights growing divergence between asset owners and their managers in how voting rights are exercised.
The Local Authority Pension Fund Forum (LAPFF), of which Bedfordshire councillor Doug McMurdo is a member, stands to benefit from this change. The direct voting participation enhances LAPFF's influence and engagement on corporate governance, strengthening its collective role in shareholder activism and stewardship.
The move towards pass-through voting reflects a broader industry trend whereby asset owners reclaim voting rights to better represent their interests. This shift has implications for asset managers, who may need to adapt to more direct involvement and potentially differing voting preferences of multiple asset owners. There is also growing demand for transparent and efficient systems to facilitate pass-through voting, and increasing pressure on asset managers to enhance stewardship services or separate voting execution from portfolio management.
The adoption of pass-through voting by the Bedfordshire Pension Fund is not an isolated incident. A number of LGPS funds, including Southwark and Northern Ireland's NILGOSC, have also adopted this practice through Tumelo. Vanguard, one of the world's largest asset managers, has also introduced a voting choice pilot, with 58% of its investors preferring funds offering voting choice.
The AGM season of 2025 was marked by significant challenges, with the resurgence of proxy voting and the adoption of the Voting Choice programme by State Street Investment Management globally increasing by 63%. The US Securities and Exchange Commission (SEC) also introduced new restrictions on permissible shareholder resolutions, resulting in fewer resolutions making it onto the ballot.
Despite these challenges, the use of pass-through voting continued to grow, with Tumelo reporting a 175% increase in asset owners using this method compared to the 2024 AGM season. During 90% of meetings, asset owners chose to diverge from their fund manager on at least one proposal.
The Bedfordshire Pension Fund's arrangement with Tumelo is designed to be scaled up, potentially paving the way for a wider rollout within the LAPFF. This shift towards pass-through voting could reshape engagement dynamics within LAPFF and across asset management, as asset owners reclaim control over their voting rights to better represent their interests.
References:
- https://www.tumelo.co/news/2025/04/15/tumelo-reports-175-increase-in-pass-through-voting-use-by-asset-owners
- https://www.localgov.co.uk/local-government-pension-scheme-takes-proactive-stance-on-proxy-voting/article/2019/03/27/102235
- The growing adoption of pass-through voting by pension funds, such as the Bedfordshire Pension Fund, indicates a shift in business dynamics towards more direct finance involvement by asset owners, particularly in technology-driven asset management.
- As technology companies increasingly become a significant part of businesses, asset owners like the ones in the Local Authority Pension Fund Forum (LAPFF) are recognizing the importance of having a say in corporate governance through pass-through voting, thereby influencing technology-focused business decisions.
