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Delivering a full and fair retirement: How a new generation of social pension funds in the UK can get savers more invested in their own pensions
Pensions have been undergoing radical change in recent years, with millions more now enrolled in their own contributory pensions.
However, we are not yet close to ensuring the pensions system can provide for a full retirement. And as people are expected to contribute more and more to their own pensions, many may opt-out. How can this fragility be addressed and get people more invested in their own pensions? The answer is to connect them better with what their pension savings are actually doing. Research released today by ComRes commissioned by Big Society Capital highlights the scale of the challenge but also the opportunity by speaking to real savers.
Whilst two in five say they know little or nothing about their pension, almost three quarters would want to know where it is invested.
And if they knew where it was invested, almost half would want to see it match their values, with 55% of those under 35 wanting values-based pensions.
Many would be so concerned if it was invested against their values that they would want to switch where the pension was invested or which provider holds it.
If they’re looking to move their money, people would like it to be used to help address the big challenges society is facing – the big investment need in health and social care could be helped by people’s pensions as the top issue people want their money working for, whilst many would be keen to help fill the housing gap for future generations through their pensions too.
This people-powered investment could make a big difference to addressing the grand social challenges of our time. But we also know that it would play a vital role in engaging people with their savings, and almost a third, particularly young people, would save more if they had a social pension option.
This opportunity needs to be grasped and the tools are not at our disposal. So we are calling on pension providers and fund managers to develop a new generation of social pension funds that matches people’s values. We also call on Government to ensure that pension funds know their members’ values and give them a social pension option to invest in.
The challenge of funding our nation’s retirement still looms large, however people can be more invested in their pensions by investing in what they care about. This will not only ensure that retirement is full, but fair as well.