What is a Pension?
If you live in the UK, are aged 22+ and earn above £10,000 a year, then the company you work for will automatically enrol you in a pension scheme. Your pension pot is then invested on your behalf, so the value of your pension will hopefully increase and grow by the time you retire. However, research by Hargreaves Landsdown found that only 1 out of 3 people know their pension is invested in the stock market. With such a large number of people unaware that their pension is invested, it is fair to assume that most people do not know what their pension could be funding.
To learn more about personal finance Female Invest has some great resources.
Why should I make my pension sustainable?
I recently discussed the importance of using a sustainable bank; you can read that post here. Like the money in your bank account, your pension could also be funding unsustainable and unethical activities like deforestation, expansion of fossil fuels, tobacco and arms, and weapons.
If the UK’s average pension pot (£30,000) was moved to a sustainable pension provider, up to 19 tonnes of carbon a year could be saved. Those of you who have more in your pension could save even more tonnes of carbon. If a pension pot of £100,000 is moved to a sustainable pension, 64 tonnes of carbon a year could be saved- that’s the equivalent of 9 times the average UK citizen’s carbon footprint. According to Make My Money Matter, there is around £3 trillion invested in UK pensions- imagine what that amount could do if it were invested sustainably and ethically. According to research by Race to Zero, the private sector could provide 70% of the financing needed to meet net-zero goals.
If that isn’t enough to convince you to make your pension sustainable, research by Make My Money Matter, an NGO founded by Richard Curtis (Director of Love Actually), recently found that moving your pension to a green pension provider is 21 times more impactful than going vegan, giving up flying and changing energy providers.
How to find out if your pension is sustainable?
The first step to making your pension more sustainable is finding out where your pension is held. Contacting your employer is the best place to start if you don’t know.
If you know your pension provider, you should find out what your pension is funding. Contact your current provider to ask them what they are doing to tackle the climate crisis. Make My Money Matter has a great email template tool that will help you contact your pension provider and ask important questions about what your money is financing. The template is available here. If you discover your workplace pension is unsustainable, You should ask your provider to commit to sustainability goals. reach out to your employer and ask them to re-consider the company pension provider they use.
Alternatively, if you hold a personal pension (A pension that you organise yourself) again, you can contact your pension provider to fund out how your money is being invested. If your pension is not sustainable, you should talk to a financial adviser about the best sustainable investments for your circumstances. David Hayman, campaign director at Make My Money Matter, says that the increase of online baking has made the process a lot easier.
Good with Money and Pension Bee created Good Guide to Pensions for more information on sustainable pensions if you are looking for additional resources.
Lastly, just so you know, I am not a financial advisor, and this is not investing advice. Please get in touch with a financial advisor if you have any specific questions about your pension or the best sustainable investments.