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Ethical pensions: save for retirement, save the planet

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It looks like all those David Attenborough documentaries and Extinction Rebellion marches are slowly beginning to make a difference. The nation is listening, and this week the UK’s Under Secretary of State for Pensions, Guy Opperman, is throwing in his twopence worth too:

 

Guy Opperman“[The UK’s] pension funds have the financial clout, long-term investment strategy and motivated members to back serious ways to use British [money] to address our — and the rest of the world’s — growing green agenda.

“We need more investment to drive down the cost of providing energy, to commit to more nuclear and to create carbon free solutions to this 21st-century issue. That takes a lot of capital, an ability to think very long term, and no political agendas.

“The good news is that the pensions industry has all three of these attributes. Suitably motivated, it can really make a difference.”

 

You go, Guy!

With around £1.9 trillion (that’s £1,900,000,000,000!) spread across UK pensions pots, that’s some serious spending power. Imagine how much good we could do with even just 1% of it. Of course, this won’t happen on its own – it takes positive action. But that positive action can be as small as taking the time to switch your pension fund, whether it’s a workplace pension, private pension or SIPP (self-invested private pension). So why wouldn’t you?

 

Is my pension ethical already?

These days, most people already have a pension set up through work. Handy. However, if you have a workplace pension and haven’t actively changed which funds it’s invested in, you probably aren’t investing ethically yet. Unless you’re with the government-founded NEST Pensions, most default funds aren’t particularly tailored to be green, socially responsible or any other flavor of ethical.

You can see how ethical your pension’s default fund is in the table below. It's based on research by ShareAction, a charity which aims to help create “a world where ordinary savers and institutional investors work together to ensure our communities and environment are safe and sustainable for all.”

Provider

ShareAction score

NEST Pensions

74%

The People’s Pension

58%

Legal & General (contract-based)

57%

Legal & General (master trust)

55%

Aviva

55%

Standard Life (master trust)

55%

Standard Life (contract-based)

55%

Scottish Widows

53%

Royal London

47%

NOW: Pensions

39%

Aegon UK

26%

Which pension providers are best for ethical investments?

Many of the providers listed above still provide good ethical investment funds – the table above is purely a measure of the default funds you’d be automatically invested in.

So who’s best? Well, according to analysis by the staunchly tree-hugging Ethical Consumer organisation, you’d do well to go for Royal London or Zurich, followed by Fidelity, LV= and Aviva.

As always with long-term savings and investments, it’s worth speaking to an independent financial advisor (IFA) to make sure you pick an ethical pension that’s right for your goals and beliefs. You can compare IFAs on sites like VouchedFor, or (and we’ll let you in on a little secret here) you can wait a few weeks to see our top picks of IFAs that do great work for women. Watch this space…

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