Many pension savers have little idea how responsibly their pension is invested, according to Broadstone.
The pensions and investment consultancy said 40% of defined contribution savers did not know whether their pension was invested responsibly, while a quarter (26%) assumed it was but were unsure.
Less than a fifth (17%) of pension savers could definitively say their pension was invested responsibly. However, even among this cohort, and those who assume it is, two-thirds said they did not make an active investment decision but just assumed that either their pension provider invests this way (33%) or their employer chose a pension provider to invest in this way (33%).
Despite this, the majority of savers support investing in companies or assets that consider ESG. Nearly two thirds (63%) said that they feel or would feel more engaged with their pension overall if it was responsibly invested and 41% would pay more into their pension as a result.
Dan Hopkins, head of DC workplace savings at Broadstone, said that as responsible investing grows, many savers are “blindly assuming” their pension is following the trend.
“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,” said Hopkins.
“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.”