Diandra Soobiah, head of responsible investment at the National Employment Savings Trust (Nest), explains why employers have a great chance to show how they are benefiting employees by choosing a pension scheme that invests responsibly
Given that the roll-out of automatic enrolment to all UK companies was completed in 2018, employers may be forgiven for thinking that they no longer need to talk to their employees about pensions.
But many people who have been automatically enrolled may not have much idea of which pension provider their employer has picked for them, let alone how this is investing for their retirement.
There is a great opportunity for you as an employer to highlight the benefit you are providing for your employees through your contribution to their pension pots. You could encourage those who haven’t already activated their accounts to do so, for instance, or you could start a discussion about how the funds are being invested and whether that’s in line with people’s values.
How to start the conversation
One way to get employees talking about pension investment is to enliven the subject by linking it to current affairs. Take climate change, for instance. People may not realise that fund managers are working to protect their pension pots from climate-change risks and supporting the transition to a low-carbon economy by investing in green energy projects such as wind farms and solar parks.
The importance of investing responsibly
A core part of our approach at Nest is responsible investment, including for the default funds in which most of our eight million members have money. We have more than £8 billion of assets under management, so our investment choices can have a real impact on corporate behaviour.
In a recent survey, 73 per cent of Nest members said that environmental and social considerations mattered greatly when it came to investing for their retirement.
We also asked them: “How would knowing that your pension provider is considering environmental and social factors when it invests your money make you feel?” The two most popular answers were “happy now that I know it’s doing the right thing” and “happy, although I’d expect it to do this anyway”. This demonstrates our members’ interest in responsible investment and confirms a certain expectation among them that their pension scheme is also taking such issues seriously.
So why not visit our responsible investment page, which is aimed at helping members to understand how we allocate their funds, and start talking with your employees about pensions today?