“Social pensions” could boost retirement savings
Nearly a third of employees would save more towards their retirement if they had the option of a "social pension", a survey has found. The findings came in a report published this week, Pensions with Purpose, commissioned by Big Society Capital and researched by ComRes.
The survey of 1,500 employees with defined contribution pension schemes found that 31% would save more if they had the option of a social pension – one that offered a positive impact on society as well as a financial return.
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.
Big Society Capital is calling for a range of new pension funds to be developed for those people who want to see their money invested ethically.
Simon Rowell, a senior director at Big Society Capital, said: “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.”
Three in five employees say pension providers should be responsible for providing information on how their pension money is being invested. The survey did not canvass opinions about the quality of information that is available.
A quick enquiry to this journalist’s pension company found that the Standard Life Ethical Pension Fund included holdings in Vodafone and Barclays, although there was no explanation as to why these were considered ethical companies.
The fund’s description says it seeks “to include companies whose business activities are regarded as making a positive contribution to society.”
A new generation of social pension funds could help people redirect their pensions to causes and companies they believe in
The government made auto enrolling staff in workplace pensions mandatory in 2012 on the back of fears that people were not saving enough for their retirement. All employers are required to offer a workplace pension to anyone over the age of 22 who earns more than £10,000 a year.
However, fewer than three in ten people have been consulted by their employer over where their pension fund is invested, the report found.
A mission led business review in 2016 recommended that the government encouraged and incentivised social pension funds.
The same review found that by 2030, assets under management in defined contribution pension schemes (in which a certain amount or percentage of money is set aside each year by a company for the benefit of each of its employees) is expected to reach nearly £600bn.
Photo credit: Pexels/Pixabay