On the go: Despite savers showing an interest in investing their pensions responsibly, only one in five workplace scheme members have converted their investments into green funds, research has shown.
According to analysis from Barnett Waddingham, which surveyed 2,002 individuals of which 1,230 had a workplace pension, only 20 per cent agreed that investing in sustainable funds should be the default preference for workplace pensions regardless of the return.
However, 26 per cent agreed with this choice if the return on investment was the same as for non-sustainable funds. Only 9 per cent of savers opposed the view that environmental, social and governance-compliant funds should be the default, leaving close to half, 45 per cent, indifferent as to whether workplace pensions should be sustainable.
The research also showed that 80 per cent of those surveyed who have a workplace pension disclosed that they had never changed the funds in which their pension is invested, while only 11 per cent of respondents had made one change.
The age group least likely to change their investment strategy included members aged 55 and over, with 91 per cent of the cohort claiming to be averse to change.
Respondents between the ages of 18 and 34 were the most likely to review the funds invested in, but only a third, 34 per cent, had carried out changes to their investments.
When comparing investing trends along gender lines, the analysis revealed that 85 per cent of women were less likely to change their default funds in comparison with men, who came in at 75 per cent.
While the numbers highlight the lack of conversion to sustainable investing among respondents, it still remains unclear whether this is a result of a lack of appetite to change or if accessibility to workplace pensions is the issue, the consultancy stated.
Confidence in investments carried out by trustees and governance committees could also be another factor for why workplace pension savers stick to default pensions, it added.
According to Amanda Latham, policy and strategy lead at Barnett Waddingham: “The UK is battling a bad case of inertia, with UK savers displaying a lack of confidence, ability, or knowledge around changing their workplace pension investments.
“But there’s no lack of appetite, and it’s the responsibility of the pensions industry to facilitate that appetite. The onus shouldn’t fall on individuals.
“In a system designed around inertia, we need to see policymakers and employers offering better default strategies, rather than relying on pension holders to come up with them themselves.”
Latham added: “If the UK is going to be a leader in a greener world, there’s no time to waste — we need to follow the money and do what it takes to make change happen.”
