Pension Power: What world is our money building?

Our money builds the world around us. Today, this is a world of poverty, inequality and climate crises. But it doesn’t have to be this way.

While you want your pension fund to make a return – so you have an income when you stop working – they can make a return doing good rather than harm. Why invest in social, climate and environmental breakdown when you could be investing in social progress and a climate-safe future?

What world is my money building?

Every month, you pay into a pension managed by your pension fund. Currently, this is likely being placed in a what’s called a default fund. These typically invest in the biggest companies – for example the FTSE100 index. This means that you are invested in all of these companies. Nine times out of ten, pension savings are going into tobacco firms, oil and gas majors, mining, big pharma and big banks.

What world could my pension be building?

The collective power of our pensions is huge! In the UK alone, they are worth £2.6 trillion. That’s enough to pay for everything produced in the country for a whole year. Globally, pensions account for half of all the money in the world. This means that companies rely on our pensions.

Pension funds have an important say over how companies are run. As shareholders, they own companies and can influence the way they act. We call this stewardship. They can meet with companies, ask them questions and vote on company matters at annual general meetings (AGMs). They can also file and vote on shareholder resolutions that force companies to take action. This gives them huge power to build a better world.

Moreover, if pension providers sell their shares in companies, life becomes a lot harder for them. High share prices help companies raise new funds, takeover other businesses and keep hold of staff. If more investors, like our pension funds, sell their shares then the price drops. Meanwhile, if they don’t buy company bonds (lending for specific projects), then new projects may not be able to happen at all.

They can choose to invest in companies doing good, for example renewable energy. And they can choose to move their money away – or divest – from companies that do harm. This can have a huge impact on the world your pension is building.

That sounds good, but what can I do about it?

It might be you paying into a pension every month – but it's your employer who choses which pension provider manages your money. And it's usually your pension provider who gets to decide which funds are available to you. While you want your pension fund to make a return – so you have an income when you stop working – they can make a return doing good rather than harm.

First step...

Do you know who your pension provider is? If not, check with your employer or colleagues or using this government webpage. You could have more than one pension if you have had multiple jobs, so look at these too.

Next up...

Find out what fund you are in. You can do this by logging into your online pension account. If you don’t have a log-in or can’t see what fund you’re in, then you can get in touch with your pension fund to ask.

Now some digging!

Now you know what pension fund you are in, you can start to dig into where your money is invested. Sadly, this is not that easy. Most pension funds will normally only release the top 10 investments per fund, and these aren’t always publicly available. A great place to start is your pension provider’s website – searching terms like ‘investment’ or ‘fund factsheet’ could be helpful, or take a look at their annual reports. If you can’t find company names, you might be able to find the indexes your fund invests in. Searching for that online should give you some company names.

Go further...

If your pension fund doesn’t make this information easily accessible then you can call or email them to ask. Or why not ask your employer to contact them on your behalf. They are, after all, the customer. Or if you know the name of the fund you are in, you can search it on Trustnet, who provide up to date information on what some funds are investing in.

Right, I know where my money is invested, what can I do?

This will largely depend on your pension provider and what options they offer.

For those of you who have the options to switch funds, you can find out more about doing so below. If this is not an option for you, your best chance to aligning your money with your values it by talking to your employer. We’ve got more handy tips on how to do this below.

Use your Pension Power