The Local Authority Pension Fund Forum (LAPFF) has warned directors of broadcaster Sky not to undervalue the company as it considers a bid from 21st Century Fox.

Fox and Sky have agreed a price of £10.75 (€12.86) per share, valuing the company at more than £18bn.

Kieran Quinn, chairman of the LAPFF, said: “All directors of Sky have a duty not to disadvantage the public shareholders, and the position of the non-executives will need to be robust to ensure the premium paid is appropriate and that shareholders are not disadvantaged by any temporary low in the share price.”

The LAPFF, which represents the majority of the UK’s local government pension funds for shareholder issues, said the bid should be put to a shareholder vote.

“Further clarity may also be needed so that public shareholders have full confidence that proposals are not being unduly influenced by the well-known relationships between Sky and 21st Century Fox,” the LAPFF said in a statement.

Sky non-executive directors John Nallen and Chase Carey both have roles at Fox, as CFO and vice-chairman, respectively.

Most notably, Sky chairman James Murdoch is also chief executive at Fox.

Also on Sky’s board are AP7 vice-chair Adine Grate and Aberdeen Asset Management chief executive Martin Gilbert.

Thomas Moore, a UK equities fund manager at Standard Life Investments, said in an interview with the BBC that the current price was not sufficient for shareholders.

He said he hoped the independent directors such as Gilbert would “step up and put forward a strong case that this bid undervalues the company”.

Elsewhere, the aggregate deficit of UK private-sector defined benefit schemes improved by nearly 30% during November, according to the Pension Protection Fund (PPF).

The total shortfall across the 5,794 schemes in the PPF’s 7800 index was £194.7bn at the end of last month.

At the end of October, the figure was £275.9bn. The overall funding ratio rose to 88.1%.

The improvements stemmed from a rise in Gilt yields following the election of Donald Trump as US president, causing liabilities to fall.

Most major equity markets fell in sterling terms during November.

Liabilities have also fallen due to a change to the PPF’s calculation methods, introduced at the start of this month.

Andy Tunningley, head of UK strategic clients at BlackRock, warned that “the gains of recent months only bring funding levels only slightly above where they were at the start of the year”. 

He added that 2016 had been “another lost year for many pension funds”.

Tunningley said pension funds should not rely on longer-term rises in yields, as there was a “huge” imbalance between supply and demand for government debt. 

He said: “Pension funds cannot rely on rising yields to escape their funding holes – most pension funds should hedge more interest rate and inflation risk than they currently do.”

In other news, BNY Mellon has won a contract to supply custody, accounting and depositary services for the Local Pensions Partnership’s (LPP) £5bn global equity fund.

The fund – LPP’s first since it established its pooling project – was announced at the start of November.

It comprises internally managed equities for the London Pension Fund Authority and Lancashire County Pension Fund, as well as mandates run by MFS Investment Management, Robeco and Magellan.

Finally, the UK government has launched a review of auto-enrolment for next year.

The Department for Work and Pensions announced this week that the review would focus on self-employed workers and people with multiple jobs.

It will also “examine” the 0.75% charge cap imposed on auto-enrolment defined contribution schemes.

Almost 7m people have been enrolled into a pension fund since auto-enrolment came into force in October 2012.

By 2018, all employers will be required to have some form of pension fund for employees. 

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