In the English spa town of Royal Tunbridge Wells, famed for its drinking water, and awarded the ‘royal’ prefix for Queen Victoria’s affinity for its Chalybeate Spring, around 24,000 residents and businesses have been without water for five days.

The response from South East Water, the region's monopoly water provider, has been so inadequate that the local MP, Mike Martin, has called for the CEO, David Hinton, to resign, who, by the way, appears to be in hiding.

The water company’s handling of the situation has been chaotic (initially, a water distribution centre was set up in the wrong town), with misleading and sporadic communication.

It has missed countless deadlines it set itself for restoring the water supply, and its inability to handle the crisis has seen vulnerable residents in need of a bottled water delivery forgotten.

In the meantime, businesses are unable to open, schools and nurseries are closed, hospitals have cancelled operations, and residents are struggling to maintain basic personal and household hygiene.

It’s not the first time this has happened, either. Numerous service failings have plagued South East Water. In 2023, a report by the University of Greenwich, which the Financial Times covered, revealed that between 2020-2022, the water company paid out £156m in dividends and £72.8m in interest on its £1.4bn debt, surpassing the £179.8m spent on infrastructure upgrades.

So, what’s this got to do with pensions? You might have already guessed…

South East Water is privately owned by HDF Holdings, which is owned by NatWest’s pension fund, a Canadian pension fund and an Australian infrastructure investor.

It’s no surprise – private infrastructure is an attractive investment for pension funds looking for long-term, low-risk, inflation-linked returns.

Although this may not be the case for South East Water, recent years have seen huge losses, and it was reported that it received a £200m cash injection from its owners earlier this year that was essential for it to stay afloat.

This kind of financial instability, coupled with its woefully inept water provision, throws into sharp focus the role of pension-fund stewardship, especially when members’ savings are invested in complex private assets.

Although not perfect, listed markets are subject to regular disclosures, annual general meeting (AGM) voting and well-established channels of scrutiny. Private markets operate very differently, with access to information limited to what companies choose to share.

In this case, the NatWest pension fund is not a distant shareholder but part of the ownership structure. In principle, it should make stewardship easier, but without transparency, how are scheme members and the wider public to know what action these institutional owners are taking?

For water companies, issues such as leak management, infrastructure upgrades and network resilience are key priorities. If trustees are exercising meaningful oversight, there should be a clear record of how they monitor these risks, what concerns they have raised, and what actions they have taken during repeated service failures.

Without the scrutiny that accompanies listed companies, trustees must compensate with stronger internal oversight and a readiness to intervene when required.

So, while Tunbridge Wells will see its water return today (fingers crossed), albeit with a notice that it is not safe to drink without boiling, I’m calling on the pension fund owners of HDF Holdings to fulfil their stewardship responsibilities.

The NatWest pension fund and its co-investors must show that they are not passive beneficiaries of a private asset, but accountable owners willing to drive the changes needed to stop this from happening again – starting with a change in leadership at the top.

European Pensions has reached out to NatWest with several questions for its pension fund on the stewardship of South East Water, but a response has not been received.

---