Pensions
Charities may wish to incorporate social, environmental or ethical criteria into their pension provision.
In this section:
Occupational Pension Schemes
Stakeholder Pensions
Group Personal Pensions and Group Stakeholder Pensions
Personal Accounts
Further information
As well as considering investments and banking, a charity may wish to consider how its pension provision can incorporate social, environmental or ethical (SEE) issues.
Pension provision could include providing access to a stakeholder pension scheme, a group personal pension arrangement or an occupational pension scheme. All provide opportunities for incorporating Responsible Investment issues.
A charity may need advice to understand which is the best option for its organisation, and help to identify pension funds which incorporate SEE issues.
Occupational Pension Scheme
A large charity may provide its own occupational pension scheme.
Since July 2000 the trustees of an occupational pension fund are legally required to declare in its Statement of Investment Principles (SIP)
"the extent (if at all) to which social, environmental or ethical considerations are taken into account in the selection, retention and realisation of investments;” and
“the policy (if any) directing the exercise of the rights (including voting rights) attaching to investments"
An occupational pension scheme means that all responsibility for social and environmental considerations lies with the trustees, and will ultimately reflect on the employer.
The UKSIF Sustainable Pensions Library suggests key reading material for trustees on Responsible Investment, including details of key initiatives and legal and financial arguments for SRI.
The Just Pensions Responsible Investment Trustee Toolkit provides detailed guidance for pension fund trustees on how they can incorporate social, environmental, ethical and corporate governance issues into their pension investments. Download report
Stakeholder Pensions
Stakeholder pensions are low-cost personal pensions. Many employers are required by law to offer their employees access to a stakeholder pension scheme.
Stakeholder pensions are subject to the same SRI disclosure requirements as occupational pension funds.
A charity can designate a stakeholder pension which offers the choice of an SRI fund.
The register of stakeholder pension schemes is a list of approved and registered stakeholder pension schemes published by the Pensions Regulator.
Group Personal Pensions and Group Stakeholder Pensions
This arrangement means that each individual staff member chooses to effect their own pension, from an insurance company or fund manager chosen by the charity (and their adviser).
Group Stakeholder Pensions are subject to SRI disclosure requirements.
Group Personal Pension arrangements are not subject to the same SRI disclosure requirements as occupational pension funds and so do not have to disclose their SRI policy. The choice of whether to include social or environmental issues in the selection of a pension is up to each individual member, (provided that this is available from the chosen provider).
A charity may therefore wish to select an insurance company or fund manager that provides an ethical pension fund amongst the options available to staff.
The costs and benefits of group personal and group stakeholder pensions differ. It is therefore important that a charity understands these differences and receives appropriate advice.
Personal Accounts
The Government plans to introduce a new low cost national pension savings scheme from 2012 particularly for those on low to moderate incomes who do not already have access to a good pension scheme. This is likely to include many charity employees. The Government has said that it will be run as an occupational pensions scheme and so will be required to disclose its SRI policy. It expects that the choice of funds available will include social, environmental and ethical investments. For more information visit www.dwp.gov.uk/pensionsreform
Further information
FairPensions calls for responsible investment by UK pension funds.
FairPensions gives a voice to people who want their pension funds to be more ethical. It challenges pension funds to hold companies to account and show how responsible investment can generate better returns.
Just Pensions was an UKSIF programme designed to educate and influence UK pension funds and other institutional investors about the importance of international development issues in their practice of SRI.
The National Association of Pension Funds (NAPF) is the leading UK body providing representation and other services for those involved in designing, operating, advising and investing in all aspects of pensions and other retirement provision.
NCVO provides details of employers’ obligations regarding pensions.
The Pension Service has been set up by the Government, and its website includes information and advice for employers on stakeholder and occupational pensions.
The Pensions Trust is a multi-employer occupational pension scheme for the charitable, social, educational, voluntary and not-for-profit sectors. Its website includes a pensions glossary.
