Some 40% of pension savers don’t know if their pensions are invested responsibly with many more assuming their pot is, analysis of Financial Conduct Authority (FCA) data by Broadstone has revealed.
The United Nations Principles for Responsible Investment define responsible investing as ‘considering environmental, social and governance (ESG) issues when making decision and influencing companies or assets.”
When asked if their pension was invested responsibly just 17% of Defined Contribution (DC) savers said it was with a quarter assuming that it was.
Even those who said their pension was invested responsibly, two-thirds said they did not make an active investment decision but assumed that either their pension provider or employer chose to invest in that way.
To read more on this topic, visit: Sustainability Disclosure Requirements on track for Q4 – FCA
The data also revealed that 63% of DC savers said they would feel more engaged with their pension overall if it was responsibly invested and 41% would pay more into their pension as a result.
Damon Hopkins head of DC Workplace Saving at Broadstone, said: “ Responsible investment is fast becoming well and truly entrenched in the design and selection of pension investment strategies – and rightly so.
“However, the type and extent of integration of responsible investment factors varies significantly and many pension savers are blindly assuming their pension is invested responsibly, banking on the good intentions of their employer or pension provider.
“We expect scrutiny over responsible investing to intensify amongst savers, so providers and employers (and their advisers) will need to be able to clearly evidence and articulate their investment profile and its wider ESG benefits.
“As this issue snowballs in prominence we believe it could become a key area of risk and differentiation, as savers increasingly focus their savings in investments that provide long-term real returns and make a positive difference to society and the environment.”
