Pension scheme trustees should work with employers and pension providers to develop best practice for better engaging scheme members with their pension investments and encouraging them to register on their pension platforms, in order to encourage more social impact investing.
According to a report for the government by the independent Advisory Group, titled, Growing a culture of social impact investing in the UK, doing so would lead to better alignment with members’ non-financial values, with social impact investments as potential fund choices providing they have an appropriate risk/reward profile.
The report also said that as product track records mature, it envisages growth in social impact investing as a natural part of default funds.
The report is part of the government’s investigation into how the providers of savings, pensions and investments engage with individuals to enable them to support more easily the things they care about through their savings and investment choices?
It also suggested that regulators, including The Pensions Regulator and the Financial Conduct Authority continue to build capability in relation to social impact considerations so that, as the market develops, social impact is embedded in regulatory frameworks and understanding. The financial services industry were told to build capability and integrate social impact into business as usual.
“Industry should engage widely to improve professional skills for social impact; to work with academics and service providers to develop a robust performance/outcome evidence base; to develop with industry bodies initiatives to sustain momentum and ensure quality as the market develops; and to provide tools and training for pension scheme trustees and independent financial advisers (IFAs),” the report said.
In addition, the report also recommended the financial service industry continue to develop its savings, pensions and investment product suite with the individual investor in mind, utilising both ESG and social impact investment options. Examples of replicable models are shown as case studies throughout the report.