Pension savers feel strongly about responsible investment issues, with younger age groups feeling especially concerned about the state of the world, according to new research, Navigating ESG: A Practical Guide, from the DC Investment Forum (DCIF), which was launched at the group’s annual event on 26th April. Download the report here.

Making the connection between these issues and their pension savings could be the key to greater engagement with young savers.

The majority (80%) of 22-34-year-old savers reported being much more interested in environmental issues today than they were five years ago, in a quantitative survey of 1,000 savers which was carried out by research agency Ignition House on the DCIF’s behalf. Three quarters of young savers (74%) said they felt more strongly now about making sure that companies are well managed than they did five years ago.

Across the board, savers reported they were making responsible choices in their daily lives. For example, 95% said they recycled waste, 87% were trying to reduce their use of plastic, and 71% bought from sustainable brands, such as those certified by Fairtrade.

These concerns do not extend to where their pension savings are invested, however. In one-to-one interviews, members were shocked to discover that their money could be invested in tobacco manufacturers, companies that might underpay their staff, or overpay their chief executives. They were amazed to learn that their pension savings may not automatically be invested with responsible investment principles in mind.

Helping people to understand that their DC pension savings are invested in real-world companies, instead of locked up in a bank vault in Zurich (as one interviewee thought), could unlock the door to greater engagement with investment issues. Several of the savers Ignition House interviewed later reported that they had made enquiries about responsible investment with their pension providers.

The DCIF commissioned this report to provide a framework for pension schemes who have struggled to put responsible investment principles into practice. In the report, we:

  • Decode the language which is used around responsible investment and the key players involved;
  • Demonstrate that members care about the issues involved;
  • Explain what the law currently says;
  • Discover how some schemes have approached the field;
  • Explain how communications experts suggest trustees could discuss responsible investment with members.

Annabel Tonry, chair of the DCIF, said: “Making people aware that the way their pension money is invested has a real-world impact could be a powerful tool for better engagement. We all know that today’s auto-enrolment minimum contribution rates are not enough to ensure a comfortable retirement. If savers understood more about how their money is invested, they might feel more anchored to pensions and investments.

“The DCIF’s membership of investment managers are committed to ensuring the best possible returns for savers. A whole range of issues are material to investment returns, from ensuring that companies are paying their senior staff salaries that are commensurate with the results they are achieving, to addressing climate change. In this research, we hope to empower the rest of the industry to join us on our mission to bring responsible investment further up the agenda – and more reflective of the priorities of the savers who we serve.”

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