New research from Moneyfarm has found that 86% of 18-29 year olds and 73% of millennials would rather accept lower returns on their pension savings and work past the standard retirement age to make up for the shortfall, than fund what they perceive to be socially or environmentally-damaging industries.
This figure fell to one in three (34%) among the general population.
The tobacco industry (44%) topped the list of sectors that Brits do not want their pension money invested in, followed by alcohol (31%), defence and ammunition (25%), fast fashion (22%) and oil and gas (21%).
However, one in three (31%) say they have no issues or worries investing in any sector.
The digital wealth manager said that on the whole, however, investment returns are still more important for Brits, with 60% admitting this was the priority when selecting a pension plan compared to a scheme which has environmental and climate concerns in mind (28%).
According to the research, 90% of those aged 18-29 say they proactively ensure they are not invested in funds which do not align to their values, with those approaching retirement age the least concerned (64%). Despite this, a third (35%) of Britons do not currently have an ethically invested pension plan, while 33% are unsure whether they have one as it has never occurred to them to check, with 52% admitting they would not know how to find out.
Furthermore, more than two fifths (42%) do not know which industry sectors their pension is invested in and 43% are unaware that they have the power to select and choose.
Carina Chambers, technical pensions expert at Moneyfarm, said the lack of knowledge stems from auto-enrolment.
Chambers explained: “The research found that the likely reason for this is that the majority of people are auto-enrolled into a workplace pension which, by default, typically puts them into a standard plan which they then don’t go into and amend and select funds which are more personal and tailored to their values and aspirations. We found that only 23% of people we asked were using a pension adviser to help select a pension plan for them.”
In addition, Moneyfarm said its research showed that over half (56%) of Brits have no idea how much their pensions could be worth when they retire, with 43% admitting they don’t have a clear strategy on how they can get the most out of their pension for retirement. Nearly three fifths (59%) don’t know what risk portfolio their pension is in.
Chambers added: “Whilst contributing to a pension is a crucial step towards financial security, this research shows that the investment choices that drive the growth of those funds often get unexamined.
“We also see the generational divide in attitudes towards ethical investing is striking. While Gen Z shows a strong preference for aligning their investments with their values, even at the cost of financial returns, older generations who are that much closer to retirement tend to prioritise higher returns over ethical considerations.
“Ultimately, understanding that we have control over how our money is invested can empower people to align their pensions with their values and long-term financial goals, helping them make more informed decisions about their financial futures.”
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