Pension saving: Green pensions could give you bigger retirement pot | Personal Finance | Finance
In recent times there has been an uptick in the level of interest people have in investing their pension savings ethically and sustainably. How and where someone’s pension is invested can have a huge impact on their carbon footprint, with many people’s savings put into fossil fuel and oil companies without their knowledge.
In the past, investors had been forced to sacrifice the performance of their investments and ultimately the size of their retirement pot if they wanted to invest in more sustainable funds.
However, this may no longer be the case.
Andy Harris, Commercial Director of The Sustainable Pension Company, spoke exclusively to Express.co.uk and discussed how times have changed to the point where ethical and sustainable pension funds can provide people with even better returns than traditional funds.
He said: “We no longer have to suffer poor returns in order for investment investments to be sustainable.
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He said: “What tends to happen is that, with the majority of people, their employer will select a default fund for them, and that’s where they stay.
“The reason for that, is that people are thinking they’ve got 20, 30, 40 years to retirement, it will do what it needs to do.
“Then they’ll move on to another employer and they’ll start building up another pot which is doing exactly the same thing.
“We invariably come across people that have got four or five, six little pots scattered around, and they’ve got no idea where they’re invested.”
While previously investors had to take a financial trade-off for their interest in investing responsibly, Mr Harris explained how this has changed and why sustainable funds will be the dominant vessel for pension investment in years to come.
He said: “A few years ago it was a very different matter. Nowadays, the sustainable funds are in some cases outperforming the majority of other funds.
“That’s no real surprise because well run businesses are going to do well. It’s as simple as that.
“There are going to be more and more of those in the future, to the extent that if people aren’t moving their pensions into sustainable funds, it’s going to have the opposite effect, because they’re going to be investing in businesses that aren’t run very well, and aren’t sustainable.
“I think in three or four years time 95 percent of funds will be sustainable, there’s no question. Partly because they are the businesses and the funds that are going to perform.
“It’s not even going to be an option in the not too distant future, it’ll become a requirement.”
Those who wish to invest their money more ethically can look to do this through ESG funds.
ESG funds have been deemed to meet certain standards for environmental, social and governance standards.
