A survey has revealed that almost two thirds of the pension industry does not believe that defined benefit schemes should poll members on investment concerns, such as environmental, social and governance (ESG) issues.
The survey, from Professional Pensions, asked participants if defined benefit schemes should follow the lead of the Universities Superannuation Scheme (USS) and survey member on their views on ethical investing.
The USS is the UK’s largest pension scheme, with assets of £44 billion. Following a campaign earlier this year the scheme has agreed to survey its members to see how they view non-financial factors across a range of ESG issues.
However, the latest survey suggests that many in the pensions industry don’t believe that other defined benefit schemes should follow suit. Some 64% of respondents rejected questioning members about their stance on ethical issues. Some participants explained they answered ‘no’ because trustees should make their own investment decisions on the basis of professional advice, whilst others noted that large variance in opinion would be likely.
Several respondents also stated such a move was unnecessary because members are “probably not too concerned” or would not opt for ethical investing if it meant losing other benefits, including returns decreasing.
However, separate research suggests this is not the case. According to research from the National Association of Pension Funds, pensions savers prefer long-term investment strategies, even at short-term cost. Some 70% of savers indicated that values and ethics were important to them.
Those that responded ‘yes’ to surveying members on ethical issues noted the benefits engaging with members could have but added it was important to inform members that other issues, such as risk and return, would also be taken into account.
One participant wrote, “Many schemes probably don’t do enough at the moment to gauge members’ views on how they invest. It’s also important for schemes and investment managers to remain engaged with the beneficiaries of their investments.”
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