Nearly three-quarters of people want to know where their pension pot is invested, yet two in five Defined Contribution (DC) pension savers admit they know little or nothing about it. That’s according to a new report, Pensions with Purpose, commissioned by Big Society Capital and researched by ComRes.
The survey of over 1,500 UK employees with a Defined Contribution (DC) pension found that fewer than three in ten people have been consulted by their employer over where their pension fund is invested. Yet almost half of those surveyed (46%) feel it is important that pensions are invested in organisations that reflect their social and environmental views – with health and social care, environmental projects and housing the top areas of preferred investment.
By 2020, it’s predicted that 18 million people will have a DC pension in the UK, driven largely by auto enrolment, however there are concerns that workers will fail to save enough. The research highlighted an interest in new pension products, with nearly a third of employees (31%) saying they would save more if they had a social pension, offering a positive impact on society as well as a financial return. Almost half of those aged under-35, the millennial generation, said they would feel more engaged with their employer if social pension funds were offered.
Three in five employees say pension providers should be responsible for providing information on how their pension money is being invested. Nearly 40% of employees said they would want their pension money invested in something else if the investments didn’t match their values and over a third (35%) would want their employer to switch provider.
Simon Rowell, from Big Society Capital, said: “Clearly people care about where their pensions are invested, but the current system is not working for many who are 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.”