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Almost half of employees want their pensions to reflect their values - health and social care top choice for investment
Nearly three-quarters of people want to know where their pension pot is invested, yet two in five Defined Contribution (DC) pension savers admit they know little or nothing about it. That’s according to a new report, Pensions with Purpose, commissioned by Big Society Capital and researched by ComRes.
The survey of over 1,500 UK employees with a Defined Contribution (DC) pension found that fewer than three in ten people have been consulted by their employer over where their pension fund is invested. Yet almost half of those surveyed (46%) feel it is important that pensions are invested in organisations that reflect their social and environmental views – with health and social care, environmental projects and housing coming in the top areas of preferred investment.
By 2020 it’s predicted that 18 million people will have a DC pension in the UK, driven largely by auto enrolment however there are concerns that workers will fail to save enough. The research highlighted an interest in new pension products, with nearly a third of employees (31%) saying they would save more if they had a social pension, defined as offering a positive impact on society as well as a financial return. Almost half of those aged under-35, the millennial generation, said they would feel more engaged with their employer if social pension funds were offered.
Three in five employees say pension providers should be responsible for providing information on how their pension money is being invested. Nearly 40% of employees said they would want their pension money invested in something else if the investments didn’t match their values and over a third (35%) would want their employer to switch provider. The research highlights the opportunity for employers and pension providers to engage pension savers through the issues they care about.
Simon Rowell, a Senior Director at Big Society Capital, said:
“Clearly people care about where their pensions are invested, but the current system is not working for many who are not engaging and not saving enough for their retirement. A new generation of social pension funds could help people redirect their pensions to causes and companies they believe in. This could not only increase saving and engagement between employees, employers and pension providers but help build a stronger society as well.”
Legal & General Group led the UK Government’s Advisory Panel into growing the Mission Led Business Economy in 2016, which made ten recommendations including bringing social pension funds into the UK marketplace.
Rhodri Mason, Head of Product at Legal & General Investment Management, said:
“We welcome the Big Society Capital report into consumer demand for UK Social Pension Funds. We are particularly pleased that the research indicates where social investment managers might offer pensions that improve outcomes both for future pensioners and also for UK society as a whole, in the areas of Health & Social Care, Housing and National Infrastructure.”
Paul Todd, Director of investment development and delivery at NEST, said:
“This research adds to the growing body of evidence showing that far from being uninterested, most people care how their pensions are invested. It also highlights an interesting generational split. Millennials in particular expect their savings to be invested in ways that both generate sustainable returns and reflect their values. This is why NEST has a strong commitment to act as a responsible investor on behalf of its four million members. As investors, we’re always interested in innovative ways to deliver good investment performance that is also in line with our members’ values.”
Big Society Capital is calling on employers, pension providers and fund managers to develop a range of new social pension funds that will meet the demands of a new generation of savers that want to see their pensions aligned with their values.
Interim Senior Media Manager, Big Society Capital
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NOTES TO EDITORS
- Two in five (40%) people know little or nothing about their pension
- Nearly three-quarters (72%) say it is important that they know where the money they put into their pension is invested.
- Fewer than 3 in 10 employees with DC pensions say their employer has consulted them over the investment of their pension funds
- Nearly half of those surveyed (46%) felt it was important that pensions were invested in organisations that reflect their social and environmental views; rises to 55% for millennials
- Two in five employees (39%) said they would be more likely to take up a pension if their employer offered social pension funds, and nearly a third (31%) say they would save more if a social pension was offered to them
- The top four areas for investment are: health and social care, environmental projects, national infrastructure projects and housing
- Nearly 40% of people say having a social pension would make them feel more engaged with their employer; this rises to nearly 50% of millennials
- Almost three in five employees (57%) say pension providers should be responsible for providing them with information on how the money they put into their pension is being invested.
- Nearly 40% would want their pension money invested elsewhere if the investments didn’t match their values and 35% say they would want their employer to switch provider (this rises to 40% for millennials)
- Two thirds (66%) of people say it is important for their employer to demonstrate their social and environmental values
ComRes interviewed 1,500 UK employees with a Defined Contribution (DC) pension between 21st December 2016 and 3rd January 2017. ComRes is a member of the British Polling Council and abides by its rules. Full data tables can be found at www.comresglobal.com.
Big Society Capital is a financial institution with a social mission, set up to build the social investment market in the UK, so that charities and social enterprises can access appropriate repayable finance to enable them to grow, become more sustainable and increase their impact on society. It is doing this by building a diverse social investment market: encouraging investors to lend or invest money to achieve a social as well as a financial return.
Since it was set up as an independent organisation in 2012, Big Society Capital has invested, along with its co-investors, over £285 million in specialist organisations who lend to charities and social enterprises. For more information visit www.bigsocietycapital.com