The report, Reclaiming Ownership, covers nine pension providers with £1.9trillion in assets under management. This is a sizeable proportion of the £3trillion life insurance companies and pension funds market in the UK.
The providers’ default auto-enrolment funds were ranked on transparency, governance and Responsible Investment performance. Out of a possible total score of 80, the providers rank as follows: Aviva (39); Standard Life (contract-based scheme) (37); Standard Life (master-trust) (36); Aegon (32); NEST (27); Legal & General (master-trust) (23); Legal & General (contract-based schemes) (23); NOW: Pensions (17); Royal London (16); Scottish Widows (13); The People’s Pension.
Under automatic enrolment, employers must enrol staff earning more than £10,000 a year into a pension scheme. In 2016 alone, half a million small employers must select a provider for their staff. It is estimated that by 2018, the number of UK pension savers in an auto-enrolment scheme will have grown by 9 million.
The providers surveyed for this research are set to dominate the UK’s private pensions market for decades to come. The ShareAction survey found that:
- Not a single auto-enrolment pension provider in the group has chosen to put a pension saver with assets in the scheme on its board. Historically UK pension schemes have had at least one third of their boards made up of Member Nominated Trustees whose own retirement savings are in the scheme concerned. In the context of significant problems over the last decade with conflicts of interest, poor service and value for money in the contract-based side of the UK’s pensions market the lack of pension savers with ‘skin in the game’ on the boards of the UK’s major auto-enrolment providers is troubling.
- A number of these giant providers are delegating virtually all responsibility for the prudent stewardship of pension savings to asset managers, rather than developing and communicating their own investment policies to protect members’ savings. Most of the schemes do not disclose investment policies to customers on their customer-facing websites. This makes it unclear how, or indeed if, these pension providers scrutinise their asset managers and hold them to account on behalf of savers.
- The problem of weak oversight is particularly severe when the asset managers are third parties and not part of the same firm as the provider. Only five of the providers require evidence of stewardship capabilities when selecting external asset managers. Only two of the providers surveyed, NEST and Aviva, have issued statements of compliance with the UK Stewardship Code as asset owners.
- NEST, the government-backed auto-enrolment provider, got the best score on governance. NEST is to be commended for having a section on Responsible Investment on its customer facing website. NEST and NOW: Pensions both have a member panel with more formal roles in the governance structure, although neither has a member on its board. Aegon, Standard Life and Aviva have established customer hubs or customer research communities. While the research finds some emerging best practice, overall the report concludes that communications and accountability to members “still fall way short of what is needed to overcome the public’s widespread lack of trust and understanding of the pension sector.”
- There is a wide variation on how the schemes are integrating social, environmental and governance risks into their investment strategies. Under auto-enrolment, savers bear all the risks if investments perform badly – even though the employer decides which scheme to enrol with. The criteria on which employers select a pension provider tend to focus on the cost to them and the ease of setting up a scheme. Important as these are to employers, they make no difference to the savers’ long-term outcomes. The research identifies a serious risk that members’ best interests will not be the determining factor by which pension providers succeed in winning market share over the next crucial years of the auto-enrolment journey.
In 2014, the Pensions and Lifetime Savings association (PLSA, then the NAPF) released data showing that 70% of UK adults “felt it important for pension providers to invest in companies that concentrate on avoiding unethical practices” and 49% would like their employer “to choose a provider which makes a specific point of investing ethically.”
ShareAction’s research examined the providers’ policies on a range of responsible and ethical investment topics known to be of interest to UK pension savers: executive pay, corporate tax transparency, climate change risk, investments in companies manufacturing controversial weapons, and human rights. It found that:
- Aegon is the only company to have a clearly disclosed policy of avoiding companies that manufacture weapons banned under the Inhumane Weapons Convention, such as cluster munitions. Aegon’s parent company is in the Netherlands where it is illegal for pension funds to invest in such firms. In the UK there is no such law, and there is no guarantee that funds are not invested in the manufacture of these controversial weapons. Four of the providers surveyed (Legal & General, Royal London, NEST and The People’s Pension) do not provide any public information on how they invest in arms in their default funds.
- Only four providers (Aviva, NEST, Standard Life and Legal & General) describe the need for companies’ remuneration policies to be linked to the long-term financial success of the company. None of the providers’ policies expect companies to provide their shareholders with comprehensive reporting on tax policy and taxes paid in different jurisdictions. Since 2008, corporate tax avoidance and executive remuneration have consistently been ranked as the top two issues that concern the public with regard to corporate behaviour.
- On climate change, Aviva got the highest score. Only Aviva, Aegon and Legal & General state that they invest in companies or projects that support the transition to a low-carbon economy and emissions reduction in the economy as a whole, a finding described as “concerning”.
Many of the providers do little or nothing to find out which investment issues their pension savers care most about. Only Standard Life surveys members of its default auto-enrolment fund on their views on investments. None of the providers give information in their annual statements to members about what they are doing to invest their savings responsibly with regard to environmental and social issues.
Catherine Howarth, Chief Executive at ShareAction, said: “At a time when thousands of employers in the UK are figuring out what pension provider to select for their workforce, we’re pleased to release information that will help employers make a choice that is guided by the long-term needs and interests of their staff. We’ve looked under the bonnet at the investment policies of the UK’s dominant players in auto-enrolment and found a serious gulf in performance between the best and worst when it comes to managing conflicts of interest, good governance and responsible stewardship of assets. These factors will make a huge difference to UK pension savers over the long-term.”
Camilla de Ste Croix, Senior Policy Officer at ShareAction and one of the report’s authors, said:
“We’re proud to have produced the first independent benchmarking survey of auto-enrolment pension providers, particularly as it’s not always easy to find out how and where pension savers’ money is invested. Although we found much room for improvement across the board, we also found that there is plenty of best practice that pension providers can draw on if they want to know how to improve. Whether looking at their peers at home in the UK, or oversees, particularly to the Netherlands, joining collaborative investor initiatives or making use of the many emerging international norms and standards its easier than ever for pension providers to invest more responsibly.”
Daniel Godfrey, former Chief Executive of the Investment Association, said: “Nobody has longer-term savings objectives than members of auto-enrolment pension savings arrangements. ShareAction’s report should encourage all investment managers to support companies that have long-term strategies. Real long term thinking requires serious approaches to human capital development, research and investment. It also means supporting – and if necessary, requiring – companies to look after the environment, pay their fair share of taxes, lobby governments with integrity, andaddress pay inequality and diversity. ShareAction is reinforcing the importance of long-term investment approaches to pension scheme members, to companies and to the economy.”
Jill Rutter, a Scottish Widows pension customer, said: “This research from ShareAction will help employers make more informed choices about which pension provider to use, and is a valuable resource for savers too. It’s really hard to find information about where your pension savings actually go, and not enough providers are taking the time to actually find out what their customers think. I am concerned about climate change and don’t want my savings to be invested in companies with high-carbon business models. Having this information publicly available puts pressure on all pension providers to take a more responsible approach to their investment practices.”
How Climate Change Altered this Engineer’s Life
Living the life of an engineer likely sounds pretty glamorous: you are educated and highly regarded, typically have high paying gigs, and with the breadth of knowledge and array of fields of specialty, your possibility for jobs is usually immense. But what if there was something else that needed your attention? Something bigger than just being an engineer, going to work every day and doing the same technical tasks typically associated with the profession?
For Kevin McCroary, that is exactly how it played out. A successful engineer, gainfully employed in a prosperous job, a simple trip to the Philippines made him see that there was a bigger issue at hand than using his engineer training in a traditional profession. This bigger issue was that of climate change. And working as a volunteer for underprivileged children in the Philippines, he saw first-hand the extensive pollution and poverty that existed here and that impacted the livelihood of these kids and their families.
Upon returning home, from his trip to the Philippines he had a new perspective of the impact we as individuals and as humanity have on the earth, and more than that Kevin wanted to know more. He started to do some research and study these human-environmental interactions, and shortly thereafter ended up in Greenland. There, he spoke to a man who had lost his home in a tsunami, and, who, through consistent weather tracking could indeed confirm that the current weather trends were “strange:” there was undeniably a general warming tendency happening in the arctic, causing an array of negative effects.
The combination of these observations, as well as his own research, led Kevin to conclude that something had to be done. With that in mind, he launched his project Legend Bracelet. The mission is simple: create a reminder of the legacy we are leaving behind. As individuals and as humanity, we are leaving behind an imprint on the earth, and the magnitude of it is something that needs to be brought to the forefront of public awareness. The idea is to have a bracelet that can serve as a daily reminder of the impact on the earth that each of us can have every day, regardless of how big or small. The bracelet has two capsules: the first is filled with sand or earth, and the second is empty. As the owner, you are to fill the empty one with your own earth, carrying it with you as a reminder and symbol of your connection and commitment to helping look after our environment.
We are all impacted by climate change, and we all have a responsibility to help. And it can start with something as simple as putting on a bracelet. Support Kevin on his Kickstarter campaign for Legend Bracelet, tell others about it, or take action in your own way and play your part in slowing down the effects of climate change. You may think “but I’m just one person!” You are indeed. But so is he. Every change starts with one.
5 Things You Can Do Yourself to Improve the Value of Your House
Whether you want to own it or list it, every once in a while, a house needs a facelift. This will not only improve quality of your life but will capitalize your home’s value significantly, too.
The best way to improve home value by yourself is to upgrade only what is necessary and nothing more. For instance, why would you buy a new bathroom door when a little retouch and a coat of fresh paint will suffice? By taking this approach, you are allowing yourself to make several small improvements instead of venturing just one or bigger ones. Select projects thoughtfully and know when you should stop.
Pitch in for the kitchen
If you really want a return on investment one day, start in the kitchen. By many, the kitchen still represents the heart and the soul of the house, the central hub of a property and it will all on its own add colossal value to your home. Moreover, the kitchen can be a breaking point in selling the house, so you should not hold on to your wallet in this area.
There are many little things you can do to spruce up the overall image of your kitchen. You may paint the kitchen cabinets, replace old door handles, add additional storage space with a sliding wall or a kitchen island if there is enough room for it. In addition, you may open the living space up by taking a kitchen wall down. Possibilities for do-it-yourself are many.
Add an attic or a basement bedroom
Properties are usually valued by two things: land size and the number of bedrooms. The price range between a three to four-bedroom home is two to four hundred thousand. Since you can’t change the size of your land, you can at least increase the number of bedrooms.
If you are prepared to go full-scale, converting the attic or the basement into the bedroom is another especially favored project that will by far boost up your home’s value once you decide to put it on the market. Until you decide to list it you will enjoy in your own extra space for entertainment, living, sleeping, playing, exercising, or whatever you fancy.
Transformation with paint
If your walls have scrapes and stained paint, a vintage color or shabby wallpaper, several cans of paint can make a striking distinction. In order to increase the value of your home, it is recommended to go with neutral colors that will unify the whole house and make the space visually bigger.
Bottom line, nothing can transform a home like a cast of fresh new paint. It is the number one way to beef up a property value of any budget. Additionally, painting the house is still one of the easiest, fastest and highest value drivers.
Secure with style
All of your effort and money would be wasted if you can’t protect the investments you made. A good security door costs as little as a few hundred dollars but if it saves you just once from being robbed it instantly pays itself off. People avoid putting security screens on windows because they mostly do not look stylish enough, but there are other options, such as installing shutters. There are so many elegant and cool shutter options that we found at Independent Blinds & Awnings that it’s really hard not to find something for you.
Basic maintenance for a worry-free mind
A clean house is a healthier house for you and your family. By making a clean house your number one on the list for improving, you accomplish a couple of things at once.
First, you stay on track with maintenance issues and, consequently you are able to recognize future problems before they become costly ones. Secondly, you don’t allow dirt and garbage to pile up over time. Thirdly, smudged, dirty windows can have a bad impact on the overall perception of the house. Same as eyes are windows to the soul, windows are for the home. Therefore, you need to wash them properly.
Spice up the landscaping
Big backyard is an all Australian dream and still, it is more often than not the most ignored area of the house. However, landscaping is really important as it frames a property from every corner.
Simple, low budget cosmetic changes in the front yard including installing garden beds, adding plants, pebbles or mulch, and paving or painting the front walls will positively lift the curb appeal as well as the property value. As for the backyard, you may span a lawn to create more open space for you and your family to move freely, cut and reduce unruly trees and vegetation, and fix the fence if needed.
Adding value to your home through a cosmetic or structural renovation is an actual way to quickly enhance your money invested in a property. In the end, you need to make sure that if you will continue to live in the house and renovate, that your renovations will contribute to a good lifestyle and that it will give the impression of a “ready to move in” property once you decide to list it.
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