DWP launches COP 26 'green nudge' trial

The Department for Work and Pensions (DWP) has confirmed plans for over 160,000 scheme members to be encouraged to learn more about making greener pension choices in a new three-week 'green nudge' trial.

The trial, which was initially commissioned as part of the government’s COP 26 agenda, will look to explore the impact of behavioural nudges on increasing saver engagement with the sustainability of pension investments and how this could translate into greener pension decision-making.

The DWP, in partnership with the Behavioural Insights Team, will be working with three providers, Aviva, Smart Pension and Hargreaves Lansdown, to deliver these 'green nudges' to encourage savers to invest in more sustainable pensions.

The results of the project will be published “later this year”, with Pensions Minister, Guy Opperman, suggesting that the trial will provide “vital insight” into how interventions can boost saver engagement and encourage greener choices.

“Through the productive long-term investment power of pensions, we can help the UK get to net zero and deliver both investment returns and a sustainable planet,” Opperman continued. “I look forward to seeing the results.”

Adding to this, Aviva director of workplace savings & retirement, Emma Douglas, stated: “We are pleased to partner with the DWP on this trial, particularly because it focuses on two incredibly important issues.

"Increasing engagement with pension saving is a top priority for our clients and for Aviva, and this trial will consider whether customer messaging around climate change can prompt people to engage more.

"Of equal importance is educating savers about the role their pension scheme investments can have in achieving net zero ambitions, and this trial will do that too. It is a real win-win opportunity for providers, consumers and ultimately, climate change.”

Hargreaves Lansdown senior analyst, Nathan Long, also emphasised the role that nudges can play in improving people’s engagement, the choices they make and ultimately their financial resilience.

"This important work comes at a time when increasing numbers of people are looking to use their investments and pensions for good but need more help to do so," he stated.

"We're also interested to see to what extent the low levels of understanding of how pensions are invested acts as a barrier".

Smart Pension investment proposition manager, Fiona Smith, also said that the provider was "delighted" to be working with the DWP on this project, emphasising that the company is a "strong believer in delivering better outcomes and promoting sustainability".

The launch of the trial also follows confirmation that the government will push ahead with new climate requirements for pension trustees to calculate and disclose a portfolio alignment metric on the extent to which their investments are aligned with the Paris Agreement.

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