Should I invest my pension ethically?

Ethical investment opportunities for your pension savings

Online searches for ethical and green investment for pension plans has increased. Investors are becoming focussed on their social responsibilities and carbon footprint.

Ethical investment opportunities are becoming increasingly popular. Ethical options are available under all modern private pensions. Historically, ethical funds have underperformed the market. Of course, these funds aren’t out to exploit the arms trade or mistreat third-world workers, meaning profits aren’t always comparable with unrestricted investment funds.

In recent years returns in ethical investments have generally improved. Modern-day ethical funds are now able to benefit from recent global developments in ethical practices. The reduction in plastic products and increase in paper products have helped. As has the West’s drive for better working conditions for the entire supply chain.

Ethical Fund Management

Ethical investment funds are managed to a strict mandate. This ensures investment opportunities are positively or negatively screened to fit.

Investors must review the ethical mandate of an investment to find out if it suits them.

Under positive screening, fund managers seek out investment opportunities for promotion of ethical practices. Negative screening processes mean that certain trades are screened-out. This is commonly exclusions over arms trading, tobacco or pharmaceutical testing.

Where can I find out more about investing ethically?

Do general research around investment opportunities and always ensure you take a mixed-asset strategy. While investing a proportion of your portfolio in ethical opportunities, you must maintain a diverse approach.

Ask your adviser about the ethical investment range available in your pension plan. Your adviser may conduct wider research for you if needed, to find a pension ‘wrapper’ allowing investment into the best ethical funds. An ‘open architecture’ pension such as a Self Invested Personal Pension (SIPP), or Qualifying Recognised Overseas Pension Scheme (QROPS) would offer a range of options.

Should I invest my pension ethically?

Pension Transfer Personality Quiz

Take our free pension transfer personality quiz to find out if a pension transfer is right for you!

1 / 10

How would you describe your investment or financial planning experience?

2 / 10

Where will you live in retirement?

3 / 10

What sort of taxpayer will you be in retirement?

4 / 10

How would you describe your relationship with money and finances?

5 / 10

Are your essential outgoings already covered by other retirement income?

6 / 10

Will anyone else be reliant on your pension for their financial security?

7 / 10

When you retire, will you need to withdraw a lump sum?

8 / 10

Do you require ad-hoc access to your pension funds in retirement?

9 / 10

How would your ideal retirement income be structured?

10 / 10

If you died, who would you want to benefit from your pension money?

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