Young Brits prefer working longer over unethical pensions

Eighty-six percent of Gen Z (18 – 29 year olds) and 73 percent of Millennials (30 – 44 year olds) say they would rather accept lower returns on their pension savings and work past the standard retirement age to make up the shortfall, than fund what they perceive to be socially or environmentally damaging industries. 

In the general population, this figure is one in three (34 percent), with our latest research — recently featured on FTAdviser — finding that the tobacco industry topped the list of sectors that 44 percent of Brits do not want their pension money invested in. This was followed by alcohol (31 percent), defence and ammunition (25 percent), fast fashion (22 percent) and oil and gas (21 percent). 

But one in three (31 percent) of the nation say they have no issues or worries investing in any sector. 

On the whole, investment returns are more important to financially worried Brits at this time, with 60 percent admitting this was the priority when selecting a pension plan compared to a plan which has environmental and climate concerns in mind (28 percent). 

With Gen Z being the most concerned about where their pension pot is being invested, 90 percent say they proactively ensure they are not invested in funds which do not align to their values – while those approaching retirement age are the least concerned (64 percent). 

However, a third (35 percent) of the nation do not currently have an ethically invested pension plan, while 33 percent aren’t sure if they have one or not as it has never occurred to them to check – with more than half (52 percent) realising they wouldn’t have a clue how to find out. 

So despite three quarters (76 percent) of the nation claiming that it does matter to them where their pension money is invested, it was revealed that 42 percent of Brits actually have no idea which industry sectors their hard earned retirement savings are being allocated to fund, and four in 10 (43 percent) don’t actually realise they have the power to select and choose.

“The research found that the likely reason for this is that the majority of people (54 percent) are auto-enrolled into a workplace pension which, by default, typically puts them into a standard plan which they don’t then go into and amend and select funds which are more personal and tailored to their values and aspirations. But people can change the fund their workplace pension is invested in by contacting the provider directly. 

“We found that only 23 percent of people we asked were using a pension advisor to help select a pension plan for them,” explains Carina Chambers, Technical Pensions Expert at Moneyfarm. 

Worryingly it seems where their money is being invested is not only what Brits are in the dark about. Over half (56 percent) have no idea how much their pensions could be worth when they retire with 43 percent admitting they don’t have a clear strategy on how they can get the most out of their pensions for retirement.

In addition, six in ten (59 percent) don’t know what risk portfolio their pension is in. 

It’s no surprise that 76 percent of Brits say they find pensions confusing with those aged between 45 and 59 years old the most likely to be left scratching their heads.

Chambers concludes, “Whilst contributing to a pension is a crucial step towards financial security, this research shows that the investment choices that drive the growth of those funds often go unexamined. 

“We also see the generational divide in attitudes towards ethical investing is striking. While Gen Z shows a strong preference for aligning their investments with their values, even at the cost of financial returns, older generations who are that much closer to retirement, tend to prioritise higher returns over ethical considerations. 

“Ultimately, understanding that we have control over how out money is invested can empower people to align their pensions with their values and long-term financial goals, helping them make more informed decisions about their financial future.”

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Our pension lets you invest with a focus on sustainability. You can choose a diversified portfolio with a mix of assets that meet environmental, social, and governance (ESG) sustainability requirements. Moneyfarm’s socially responsible portfolios are designed using funds invested in some of the most forward-thinking and impactful companies in the world – along with many others committed to improving their footprint. MSCI data helps us check ESG funds containing thousands of different assets, so we’re confident that they meet our funds’ strict criteria.

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