Almost three quarters of Scottish workers expect responsible pensions from their employer

Scottish Widows’ Responsibly Invested Pensions Report surveyed more than 6,000 employees, employers and financial advisers in the UK, to better understand their views of Environmental, Social and Governance (ESG) related issues.

The report looks at how ESG factors are influencing people's investment decisions and expectations of their employers, suggesting a knowledge gap about responsible pensions and a divide in perceptions of the benefits they could provide.

It found that pension savers are concerned about the issues impacting the world into which they will retire, influencing how they expect their pensions to be invested, and their employers’ role in this.

When asked about the biggest issues facing society today, the cost-of-living crisis topped the list for 59 per cent of Scottish employees, with 45 per cent believing this will be the biggest issue society faces five years from now. Other important environmental-related issues, including climate change (42 per cent), plastic waste (36 per cent) and water pollution (28 per cent) closely followed as top concerns for Scottish employees.

Social issues – including diversity, equity and inclusion – were also seen as some of the biggest societal issues among younger respondents (32 per cent of those aged 18 and 34 versus 14 per cent of those 55+).

As a result, not only do 74 per cent of people believe it is important that their current employer offers a responsibly invested pension, but 71 per cent said their employers’ social responsibility credentials or benefits were important in choosing their current role.

While the report highlights strong employee demand for responsible pensions, lack of awareness and education remain key barriers. Nearly two-thirds (61 per cent) don’t know how to switch from their default pension to an alternative investment option that may be better suited to meet their objectives.

Almost a quarter have concerns about whether responsible pensions have comparable returns to traditional investing. One in four stated that they do not have enough information about responsible pensions to understand their cost and benefits.

Last month Scottish Widows announced that it was embarking on a new strategic partnership with asset manager Robeco to shape its investment offering for UK pension savers, with responsible investing fitted as standard.

Eva Cairns, head of responsible investment at Scottish Widows, said: “Employees are increasingly seeking to make sure their investments – including pensions – deliver financial return while considering the impact on people and planet, and there is clear demand for more responsibly invested options. We know pension savers are concerned about financial security and believe that considering risks and opportunities related to ESG can help build more resilient investment portfolios – but it’s also about contributing to a more sustainable future, tackling some of the societal issues people care about.

“There’s still a big knowledge gap to tackle, and employers should not only offer responsible pensions, but also do more to empower employees with the information they need to make more informed decisions.”