31pc would save more in ‘social pension’

More than three in 10 DC scheme members say would save more if they had a pension offering positive impact on society as well as a financial return, research by ComRes has found.

Residential buildings under constructionAcross all age groups 31 per cent of DC savers who responded said they would save more if they were offered a social pension, risking to almost half of millennials under age 35. The survey also found that 40 per cent of people say having a social pension would make them feel more engaged with their employer, rising to nearly 50 per cent of millennials.

The survey of over 1,500 UK employees with a DC pension found that 31 per cent have been consulted by their employer over where their pension fund is invested, yet 46 per cent felt it is important that pensions are invested in organisations that reflect their social and environmental views.

Health and social care, environmental projects and housing ranked highest in the areas of preferred investment.

Nearly 40 per cent of employees said they would want their pension money invested in something else if the investments didn’t match their values and 35 per cent would want their employer to switch provider. The research highlights the opportunity for employers and pension providers to engage pension savers through the issues they care about.

The research was commissioned by Big Society Capital, which is calling on employers, pension providers and fund managers to develop a range of new social pension funds that align investment strategies with savers’ values.

Big Society Capital senior researcher Simon Rowell says: “Clearly people care about where their pensions are invested, but the current system is not working for many who are not engaging and not saving enough for their retirement. A new generation of social pension funds could help people redirect their pensions to causes and companies they believe in. This could not only increase saving and engagement between employees, employers and pension providers but help build a stronger society as well.”

Legal & General Investment Management head of product Rhodri Mason says: “We welcome the Big Society Capital report into consumer demand for UK Social Pension Funds. We are particularly pleased that the research indicates where social investment managers might offer pensions that improve outcomes both for future pensioners and also for UK society as a whole, in the areas of health & social care, housing and national infrastructure.”

Nest director of investment development and delivery Paul Todd says: “This research adds to the growing body of evidence showing that far from being uninterested, most people care how their pensions are invested. It also highlights an interesting generational split. Millennials in particular expect their savings to be invested in ways that both generate sustainable returns and reflect their values. This is why NEST has a strong commitment to act as a responsible investor on behalf of its four million members. As investors, we’re always interested in innovative ways to deliver good investment performance that is also in line with our members’ values.”