BRITONS could boost their retirement savings by investing in ethical pension funds which may produce bigger returns and help in the fight against climate change.
Many people would be horrified to find that they have unknowingly invested in arms firms, tobacco companies and fossil fuel miners. This could well be a reality, as many people’s pensions are being invested into unethical funds which are not even providing them with the best returns.
A new survey from NerdWallet examined the ethics of UK adults saving into a pension, finding nearly nine in 10 people would feel unhappy for their pension to be invested in a company with a poor environmental or social or governance record.
Meanwhile, 79 percent said that they would take issue with their pension being invested in a fund or company that is not ethical, even if it is delivering a good return. Many people seem to be in the dark regarding how their pension is invested.
According to the survey, 85 percent of pension holders do not know where their pension is invested, with over a third wanting their workplace or personal pension provider to be more transparent about the companies their funds are invested in.
As a result, 85 percent of respondents did not feel confident that their pension fund is in assets that are not harmful to society. In many cases, unethical funds are not even providing the benefit of superior returns.
Indeed, ethical investment funds can often outperform traditional funds, with nearly 60 percent of sustainable funds beating their traditional rivals over 10 years, according to Morningstar.
An ethical pension means that one’s investments have been carefully selected to either avoid companies and investment sectors that harm society or the environment, or that go out of their way to actively improve things.
People who are interested in exploring more ethical pension investments can contact their provider to see how much control they have over what is held in their pension, and those with a workplace pension may be able to choose from a range of funds that their provider offers.
Those who have a self-invested personal pension (SIPP) should be able to choose what they hold in their pension from a vast array of funds, stocks, bonds and other assets.
One can then look at the investments on offer and hunt out the ethical. “Brinkwire Summary News”.