Government ditches ethical pensions plan

Plans to make company pension schemes publish details of how they have taken members’ ethical views into account when investing their money have been scrapped.

Proposals to make company pension schemes publish details of how they have taken members' ethical views into account when investing their money have been scrapped by the Department for Work and Pensions (DWP). Instead, the department said this week that it will require schemes to publish more detail on the principles they apply when making investment decisions. The announcement has disappointed ethical-investment campaigners and trade unions, who had hoped pension schemes would come under more pressure to invest in line with members' views.

There have been a string of high-profile rows over schemes with holdings in areas such as tobacco and oil investments that many savers oppose. However, pension experts point out that under the new rules it will still be possible for pension-scheme members to lobby their funds to invest more ethically. A scheme's official statement of investment principles will have to disclose the approach taken. That will let members know whether any ethical principles are included in the scheme's policies.

If they are unhappy with the approach, they will be able to pressure the scheme managers to change tack. Many unions are keen to work with groups of employees in this way. Growing numbers of schemes also offer members an ethical investment option, such as one or more explicitly environmental or sustainable funds. However, the broader law on pension-fund investment remains unclear. Schemes are generally obliged to make decisions on the basis of the financial interests of their staff, rather than other considerations. So the extent to which managers can apply ethical principles will often be limited.

Recommended

Does part of the £50bn lying forgotten in dormant accounts belong to you?
Personal finance

Does part of the £50bn lying forgotten in dormant accounts belong to you?

Around £50bn of our money is just sitting in dormant bank, savings and pension accounts. Make sure none of it's yours, says Ruth Jackson Kirby.
20 Apr 2021
The minimum pension withdrawal age is set to rise – don’t get caught short
Pensions

The minimum pension withdrawal age is set to rise – don’t get caught short

From April 2028, the earliest age at which you can take money from your pension savings will rise to 57. It's vital that you understand the detail of …
13 Apr 2021
Make sure you max out your pension contributions this year
Pensions

Make sure you max out your pension contributions this year

If you're saving for retirement, make sure that you have used up all their allowances before the tax year ends, and contributed as much to your pensio…
31 Mar 2021
Make sure you don't go over the pensions lifetime allowance
Pensions

Make sure you don't go over the pensions lifetime allowance

Breaching the lifetime allowance for pension savings could prove very costly, says David Prosser.
15 Mar 2021

Most Popular

Big Tech on steroids: why the 2020s will be the “decade of the DAO”
Bitcoin & crypto

Big Tech on steroids: why the 2020s will be the “decade of the DAO”

Big tech companies have transformed the way we live our lives. But if you thought they were disruptive, you haven’t seen anything yet. As Dominic Fris…
6 May 2021
Cryptocurrency ether has hit an all-time high. Why? And will the bull market last?
Bitcoin & crypto

Cryptocurrency ether has hit an all-time high. Why? And will the bull market last?

Cryptocurrency ether – the world’s largest cryptocurrency by market cap after bitcoin – hit an all-time high this week. Saloni Sardana looks at what’s…
5 May 2021
Could you end up paying inheritance tax on your family home?
Inheritance tax

Could you end up paying inheritance tax on your family home?

The value of the average UK home has risen by 53% since April 2009, but the inheritance tax threshold has remained static. And that means more people …
7 May 2021