The Finance Innovation Lab, with which I have been cooperating on policy creation for pensions linked to a green transition, has created a petition linked to a new government consultation on this issue.
This is what they have to say on this issue:
To: UK Pensions Minister, Torsten Bell and the UK Government
It shouldn't be too much to ask. We all want to know that, as we get older, we're going to have enough money and a thriving planet to live on.
Our pensions system is broken for all but the highest earners, investment managers and fossil fuel CEOs, with millions of ordinary people facing poverty in retirement. The UK's pension system is enormous - it's worth almost £3 trillion, and private pensions make up the single largest component of total household wealth. Yet as it stands, many of us are going to retire without enough money coming in to cover the costs of essentials like food and bills. Women, people of colour and people with disabilities are all much more likely to face financial hardship. With the right policies in place, we can make sure that everyone is able to save enough to guarantee a decent standard of living in retirement. Nobody should have to choose between heating or eating in their old age.
Right now, the way that the system works means our pensions are using our hard-earned wages to fuel the climate crisis - but they could instead turbocharge the solutions. Studies show that each pension saver has an average of £3,000 invested in fossil fuels.1 Climate breakdown means that the decades to come are set to become increasingly difficult and dangerous. Pension funds invest billions of pounds from our salaries in things like fossil fuels which pollute our air and water, wreck the climate and harm our hopes of a better future. Fossil fuel investment is a risk to our pensions too, with these investments increasingly losing value during the transition to cleaner technologies.
The majority of pension savers don't want our money to fund fossil fuels, we want our wages to be invested in safe and green industries, like renewable energy. If our pensions were invested differently, they could play a vital role in supporting a rapid transition to clean energy, and in creating jobs and growth in the technologies and industries of the future.
The good news is that this could all change. The government is undertaking the biggest review of the pensions system in a generation. This is a huge opportunity to push the Government to fix it so we all have more money in our pockets when we stop working, as well as cleaner air and a healthier environment now and in the future. Now's the time for the government to change the pensions system to stop gambling with our retirements and safeguard our hard-earned savings for the long term.
By signing this petition you are joining people across the UK, charities, consumer groups, trade unions, economists and many more to demand better, fairer and greener pensions. With enough of us working together, we can persuade the government to change the pensions system to:
- Deliver decent pensions for all.
- Fund a just transition to a thriving low-carbon economy.
- Phase out investment in fossil fuels, deforestation and other harmful industries.
Source:1: "Fossil Fuels in UK Pensions", Make My Money Matter
If you are interested in supporting this call, you can sign the petition here. And thank you, if you do.
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I had my P60 & newsletter through from my pension, the Avon Pension Fund.
It includes a picture of a visit by fund members and staff to a solar farm they own within the Avon, or former Avon area.
Sadly though it looks like the sort of investment that an employer backed defined benefit scheme would be able to make
Indeed
Done.
Thanks
Done
Can you please post a link to the petition – the poster doesn’t seem to link.
On You & Yours radio 4 yesterday there was a discussion of cryptocurrency, during which it was stated that a large pension fund had invested significantly in crypto currency ! I suppose its no worse than gambling on the stock market. And also, by one speaker, that he expected significant growth in crypto and that would help Reeves desire for growth. Quite what benefit he saw in such growth is beyond me. The world is completely mad.
It is at the bottom of the post, highlighted as a link
Nowadays, it’s entirely possible to invest one’s pension in broad alignment with one’s “Ethics”. Probably not through a ‘packaged product’ as such, as off the shelf pension products often involve too many compromises. For example, Vanguard is a huge investor in fossil fuels, and Nutmeg are owned by JPMorgan Chase – enough said.
I think that the better way to do this is to separate the administration of the pension plan from the investment choice. This would be via a proper self-invested personal pension (SIPP) from an administrator that charges ‘pounds and pence’ fees. Setting aside any advice charges – and do watch out for ad valorem percentage fees – such a SIPP would cost around £300 to set up and about £200 each year thereafter. Then you would need a SIPP dealing account (a ‘platform’) on which to hold the requisite investments. These, in the main, do charge percentage fees based on the size of the investment.
Then you buy your chosen funds, if you wish to invest in funds, from the likes of Triodos, FP WHEB, Castlefield, EdenTree, Impax, etc. These will have fees, too, of course.
It’s a bit of a faff to do all of this, but once done it will be a breeze.
This is NOT investment advice.
And as you point out, this is not straightforward and inaccessible for many.
I am sure you are right that pension funds invest part of the money in companies involved in fossil fuel use. But isn’t that because they hold a diverse range of shareholdings – to spread the risk of individual companies failing – and a significant proportion of the global shares available for them to buy are in those companies? There should also be a proportion albeit smaller of pension fund investment in companies involved in renewable energy, and it is a bigger problem than just pension funds to get renewable energy to the position where it is larger than fossil fuels in the global economy.
You have previously suggested a much better way of supporting renewable energy concerns, encouraging infrastructure investment by giving them access to low interest loans in the form of “green bonds” underwritten by the government. Since pension funds need to keep around half their money in bonds, they would surely buy those willingly and help those renewable energy companies invest and grow.
However what you haven’t really discussed is the need for such loans to be accompanied by regulation of those companies. The Thames Water fiasco tells me that regardless of whether a company’s main “product” has a public benefit, it will be quite happy to take any cheap loans available and not actually use them for very much investment (siphoning off the difference to Australia in that case). To my mind a public utility company, or a company that acquires a monopoly position, or a company benefitting from government loans, should be restricted in the amount of profit it can distribute to (say) the “safe” return on capital (return on government bonds) plus 1%,
Noted
Some more on this is coming next week
Signed. Been camping and internet free.