Chase De Vere  

Workplace pensions need to catch up on ESG, adviser warns

Workplace pensions need to catch up on ESG, adviser warns

Chase de Vere has urged providers of workplace pension products “to do more” to meet the growing demand from employers and employees for access to ethical and socially responsible investment funds.

Rebecca Dorrian, corporate consultant at Chase de Vere, said while some workplace pension providers were including socially responsible factors in their investment process “too many are doing little more than paying it lip service”.

The independent financial and corporate adviser said with companies putting a greater focus on social and ethics issues at the same time as more employees wanting their money to be invested responsibility, “there is a distinct lack of support from product providers”.

“As is often the case, the workplace is lagging behind the retail market,” she added.

Ms Dorrian said: “We are finding that an increasing number of our corporate clients want ethical and socially responsible investments to be easily accessible to their employees through their workplace pension scheme.

“Many employees are also keen to invest responsibly and, while pension schemes typically have ethical options available, we know that most employees simply stick with their default fund.”

The company said studies have shown around nine of 10 employees invest in their scheme’s default pension fund.

Chase de Vere singled out Aviva as a “positive exception” however for launching a default pension strategy based on its stewardship fund range.

Ms Dorrian added: “It is great news that Aviva has launched the Stewardship Lifestyle Strategy, a default option which includes ethical and ESG (environmental, social and governance) considerations.”

But she said the market needed to see “far more” specific ethical and socially responsible default funds being made available and “at the very least, all providers should be paying far more consideration to these areas”.

Figures published by The Pensions Regulator in February this year showed more than 10m employees have been enrolled into a workplace pension scheme, following the introduction of auto-enrolment in 2012.

“Auto enrolment has the opportunity to be a ‘game changer’ in terms of the retirement prospects of millions of people in the UK.

"An increased focus on investments in areas which are beneficial to society and to the environment can only help to increase engagement amongst employees,” Ms Dorrian said.