News & Blog

Do pension schemes need to be ethical?

  • July 11, 2012


The introduction of auto enrollment has put the pensions industry in the spotlight over the past few years by highlighting the importance of a pension and preparing for retirement. 

With stories of unethical investments however, not all the news has been positive. So should more be done to ensure pension schemes take into account the investor’s opinion on what is an ethical investment?

As more people take an interest in their pension and negative headlines such as the Church of England investing in pay day loan lender Wonga and local authorities investing in tobacco companies, employees and companies are becoming more aware of how their pension schemes are being funded and how this impacts their public profile.

The big questions is, if the scheme is making money and therefore achieving their purpose, should the ethics of the investment be taken into account at all?

In addition to the above, if fund managers are targeted on their short term financial performance should more be done to reward longer-term investments, which place more stock on the ethical implications in relation to the requirements of the individual investor?

It seems that as yet there is not a simple solution; these issues will need to be carefully considered going forward, taking into account the fact that, what is ethical and what is not, is an individual opinion and therefore considering a one fits all approach will probably not suffice.