Marvin OnumonuNearly three-quarters (72%) of UK workers reckon it’s important their employer offers a pension that’s invested responsibly, Scottish Widows research found.
Despite this, almost half (47%) of workers don’t actually know if their workplace pension is invested in a responsible way.
The Scottish Widows’ Responsibly Invested Pensions Report surveyed over 6,000 employees, employers and financial advisers to get a better understanding of their views on Environmental, Social and Governance (ESG) issues.
The report showed that ESG factors are influencing people’s investment decisions and what they expect from their employers, suggesting that there is a lack of knowledge about responsible pensions and different views about the benefits they could bring.
The research found that pension savers are worried about the issues facing the world when they retire, which is affecting how they want their pensions to be invested, and the role their employers play in this.
When asked about the biggest issues facing society today, the cost-of-living crisis was top for almost two-thirds (63%) of employees, with 49% thinking it will still be the biggest issue in five years.
Other important environmental issues, like climate change (44%), plastic waste (37%) and water pollution (33%), were also major concerns for employees.
Social issues, including diversity, equity and inclusion, were seen as big societal issues among younger workers (29% of those aged 18 to 34 compared to 18% of those 55 and over).
As a result, 72% of people think it’s important that their employer offers a responsibly invested pension, and 70% said their employer’s social responsibility credentials or benefits were important when choosing their current job.
Younger workers put even more emphasis on responsibly invested pensions.
Over three-quarters (79%) said it’s important for their employer to offer one, compared to 61% of those over 55.
Two-thirds (64%) expect their employer’s environmental and social responsibility promises to be reflected in their pension portfolios.
The report showed that a lack of awareness and education are still key barriers.
Nearly two-thirds (61%) don’t know how to switch from their default pension to an alternative investment option that might be better for them.
Less than a quarter still worry about whether responsible pensions have similar returns to traditional investing (23%) or if they cost more (21%).
One in four (25%) said they don’t have enough information about responsible pensions to understand their cost and benefits.
Eva Cairns, head of responsible investment at Scottish Widows, said: “Employees are increasingly seeking to make sure their investments – including pensions – deliver financial return while considering the impact on people and planet, and there is clear demand for more responsibly invested options.
“We know pension savers are concerned about financial security and believe that considering risks and opportunities related to ESG can help build more resilient investment portfolios – but it’s also about contributing to a more sustainable future, tackling some of the societal issues people care about.”
Cairns added: “There’s still a big knowledge gap to tackle, and employers should not only offer responsible pensions, but also do more to empower employees with the information they need to make more informed decisions.
“We’re committed to helping bridge this knowledge gap and ensuring that every pension saver can invest with confidence in a way that reflects their priorities, whilst also delivering the best possible return on their investments to ensure they are financially set up for their retirement.”
