Smart Moves | A new standard for pension fund transparency

A new standard for pension fund transparency has emerged, and Smart Pension is at the forefront. By becoming the first UK pension fund to publicly assess human capital performance across its entire portfolio, Smart Pension demonstrates leadership on people-related risk, strategic stewardship, and long-term portfolio resilience.

As of March 31^st 2025, the Smart Sustainable Growth portfolio covers GBP ~4.4 billion in AUM with public equity accounting for 70%. The public equity spans 1,751 holdings across 51 countries and 66 industries.  

Building upon the Nordic benchmark
This analysis builds on Denominator’s earlier work in the Nordics, where the first human capital assessment of the regions’ largest equity pension portfolios was conducted.  

By establishing a robust baseline and revealing meaningful differences across countries and sectors, the Nordic benchmark demonstrated how market-wide insight can enhance stewardship, strengthen risk management, and guide long-term investment decisions.

This UK report builds on that foundation, marking the first step towards a UK-specific human capital benchmark. As this work progresses, any UK pension fund is welcome to contact Denominator for a free baseline assessment.

About Smart Pension ‍

Since the launch in 2015, Smart Pension has signed up the equivalent of 1 member every 3.5 minutes. With more than 1.5 million members, it’s one of the fastest growing master trusts in the United Kingdom.

The scope of this analysis is the Smart Sustainable Growth Fund which is available members of the Smart Pension Master Trust. The investment objective is to provide long term growth as well as take advantage of Environmental, Social and Governance factors by having an allocation to investments contributing to solutions for environmental and social issues.

A deeper look into human capital performance

Smart Pension’s deep-dive analysis of social and human capital performance provides a comprehensive view, identifying both strengths and potential risk across the portfolio.

1. On the overall score, there is 0% exposure to worst performers  

Similarly, on the gender score, the portfolio exhibit 0% exposure and 2% for disability. In comparison, race/ethnicity and age scores showed an exposure of 6% – which is higher compared to the average among Nordic pension funds.

2. Executive management, an opportunity for improvement

On the overall assessment for cognitive diversity, on average, boards show 2.0% exposure to bottom performers while executive management teams exhibit 6% exposure –  signaling a higher concentration of risk in top management.  

Similar results are found in Denominator’s Nordic analysis.

3. Employee turnover as diagnostic for company culture and risk

Employee turnover varies widely across sectors.

• Top-performing sectors show 0–3% exposure to bottom-quartile companies.

• The highest-risk sectors range from 15–19%.

That is 3,700% difference between best and worst.

Turnover acts as a proxy for workforce stability, cost pressures, and cultural health — making it a critical yet often underused metric for investors.

4. Workplace policies are widely present across companies

With more than 90% presence, Paid Parental Leave, LGBTQ+ Support Initiative, and Human Rights Policy are the most common policies. Race/Ethnicity ERG and Diversity Supply Chain Policy demonstrates the largest difference between weighted and unweighted results.

Policy presence alone is not performance, but it provides essential infrastructure for evaluating alignment with investor expectations.

5. Women’s representation decreases as the leadership level increase 

With an average of 25%, women are less represented in the executive roles compared to 34% board seats. Representation largely varies between worst and best performing firms.

From workforce compared to middle management, women’s representation drop by 28% among worst performers. In comparison, best performers decreases by 15%, that is half as much.

6. Gender bonus gap is 89% higher than the pay gap

For the Smart portfolio, the gender pay gap, on average, is 19%. In comparison, the gender bonus gap is 36%. Although the difference is large, it is not unique as a similar trend is found among FTSE 100 firms in research by Denominator. This might suggest investors to pay attention to a broader scope of compensation.  

From insight to action: strengthening stewardship and long-term value

This social and human capital analysis provides the fund with far more than a portfolio-level snapshot, it delivered insight into how each individual company performs on leadership, workforce practices, and people-related risks. This level of visibility, more commonly associated with environmental metrics, strengthens the fund’s ability to act as an active and responsible investor.

Strengthening voting policies

The analysis identified leadership and workforce insights that can support Smart’s voting behavior at AGMs.

• Integrates data-driven human capital factors into voting policies

• Evaluate results across social topics not just on the board but also for the executive management, workforce and organization in general

• Enables targeted voting interventions (e.g., supporting or opposing remuneration packages based on pay gap metrics)

Stewardship and engagement

By mapping human capital risk exposure across the portfolio, Smart Pension can prioritize engagement with companies facing elevated risks.

• Focus stewardship efforts on selected issues and companies that stands out  

• Encourage dialogues that set expectations, track progress, and drive measurable improvement  

Informing product innovation

The analysis also creates opportunities for fund innovation, aligning investment design with the growing demand from next generation of investors

• Supports the development of human capital aligned funds

• Enables exclusionary screens for poor performers

• Allows positive tilts toward best performing companies

Creating the UK’s first industry benchmark

While environmental benchmarks have become a cornerstone of sustainable investing, there is no widely accepted equivalent for social and human capital performance, especially one tailored to the UK market. Without it, asset owners lack a consistent reference point for evaluating workforce practices, leadership composition, pay equity, and labor rights across their portfolios.

The Nordic Pension Report offers a glimpse of what is possible when an entire industry collaborates. It provides a clear baseline for leadership diversity and workforce conditions, and serves as a practical tool for engagement, target setting, and transparency.
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An open invitation to UK pension funds

The benchmark cannot be built in isolation. It requires collaboration across the UK asset owner community – pension funds, insurers, consultants, asset managers, and regulators – to shape its structure, data inputs, and use cases.

Pension funds can share their portfolios with Denominator and participate in the industry benchmark. Results will be anonymized as the purpose is not to rank pension funds against each other but rather creating a benchmark for comparison. Pension funds will get access to their own results free of charge.

Get in contact through this link if you would like to participate in the UK benchmark.

Contact to kristian.wredstroem@denominator.com to learn more about our data and the UK benchmark.

For questions related to the report or media inquiries, contact emma.helbo@denominator.com.

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