Invest
Giving savers a voice: report says pension funds lack ‘accountability and transparency’
People who put their savings into pension funds should have more say about the way in which their money is invested, as they currently have no legal right to know how and where investments are made, according to a new study.
The report Our Money, Our Business, by responsible investment charity ShareAction, calls for savers to be able to learn how their money is being used, in order to close the so-called “accountability gap” that exists in the UK pensions industry.
It suggests, for instance, that savers can meet and discuss with pension fund boards regularly.
The ShareAction report claims that pension funds often gave inaccurate or partial answers when they were asked by individual savers how they were acting on decisions made by companies in which they were invested.
Catherine Howarth, chief executive of the charity, said, “Through our pensions we are the true owners of some of the world’s biggest companies, but savers aren’t listened to by their pension providers even though many have pertinent views on issues like pay and environmental standards at the companies in their pension fund.”
The study calls for the investment system to become more accountable and transparent, in order to bring people closer to business’ decision. It uses Ethex, Triodos Bank and Abundance Generation as case studies of where people can invest their money directly – through simple technology – and are ‘connected’ to their investment.
“From executive pay to payday lenders like Wonga, people have never been more interested in the behaviour of listed companies. But pension savers are shut out of the investment system and denied the opportunity to have their say”, Howarth said.
“Giving savers a voice will help to rebuild trust in a broken financial system. Pension funds are a crucial link between finance, business and millions of ordinary people.”
Further reading:
Prince Charles: pensions industry ‘has a duty’ to be sustainable
‘Urgent action’ required to protect pension savings from climate change
Pensions minister: investors who see climate risks have ‘competitive advantage’
70% of investors don’t know if their investments are ethical