LONDON, June 18 (Thomson Reuters Foundation) - Pension companies will have to reveal the social and environmental impact of the billions they invest on behalf of those saving for their retirement under new rules prompted by demand from millennials, Britain announced on Monday.
The regulations will allow savers to monitor how their money is being invested by the companies running pension schemes, which have a collective value of more than 1.5 trillion pounds ($1.99 trillion), the government said.
Pensions Secretary Esther McVey said young workers were “increasingly questioning that their pensions are invested in a way that aligns with their values.”
“This money can now be used to build a more sustainable, fairer and equal society for future generations,” she said in a statement.
Millions more British workers are putting aside money for their retirement following the introduction of auto-enrolment, where companies automatically sign staff up to pension schemes.
Three-quarters of 22- to 29-year-olds working in the private sector now have a workplace pension, the government said.
Civil society minister Tracey Crouch said the announcement was an exciting opportunity for impact investment - capital placed with companies and organisations that can demonstrate they benefit society or the environment.
Michele Giddens, chair of the UK National Advisory Board on Impact Investing, said the move would also help motivate young people to save for their future at an age when retirement seems distant.
“If they can feel something about the impact of that investment, that gives them a greater connection, which is beneficial in that it motivates them more to put more into their pension plans,” she told the Thomson Reuters Foundation.
A recent survey of more than 200 investors that included pension funds, by the Global Impact Investing Network (GIIN) found money invested in projects with a social or environmental benefit has doubled in the last year to $228 billion .
Graham Precey, chairman of the group corporate responsibility and ethics committee at pension company Legal & General, said the announcement represented a marketing opportunity for the pensions industry.
"If you're a pension company that can prove how it's used money to have a positive impact on society, you're going to get more business because there are more people looking to invest in a fund with conscience," Precey said. ($1 = 0.7554 pounds) (Reporting by Lee Mannion @leemannion, Editing by Claire Cozens. Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers humanitarian news, women's rights, trafficking, property rights, climate change and resilience. Visit news.trust.org)