Women nearing retirement likely to divest pensions from firms with poor pay practices

An "overwhelming" majority of women approaching retirement would divest their pension from companies with poor pay practices, Legal and General Investment Management (LGIM) has found.

Analysis by the firm revealed that 74 per cent of women aged 55-65 agreed with this sentiment.

‘Generation X’ (aged 40-54) showed similar attitudes, with 73 per cent of women keen to divest from away from firms with poor pay and governance practices, compared to just 59 per cent of men in the same age group.

However, opinion split amongst ‘Millennial’ women, with only half of those aged 25-39 stating that they would follow the same policy of cutting out these companies from their pensions.

Instead, Millennials were more likely than any other generation to want to reduce their exposure to the fossil fuel industry, regardless of any potential consequences.

Even where there was a resulting performance impact, almost half (45 per cent) of millennial's would opt to divest their pension from fossil fuels, compared to 30 per cent for Generation X and just 23 per cent of Baby Boomers.

A further 41 per cent of Millennials stated that they would only divest from fossil fuels where it didn’t impact return, with a combined majority of 81 per cent therefore keen to divest where there is no performance impact.

The firm stated that the findings showed a “strong contrast” between the relative importance of social and governance issues to older generations, and the views of younger people, which tend to be more climate focused.

There was some consensus though, as across all age groups, nearly half of adults (49 per cent) would prefer a policy of engagement to encourage change, before divesting.

Furthermore, just half of all respondents were already aware of the types of investments within their workplace, which LGIM stated implied many more could still not be aware of possible inconsistencies between their investments and values and beliefs.

LGIM head of defined contribution, Emma Douglas, added: “This should be a wake-up call to the industry.

“There is clearly a role for more education, helping people to understand and shape the impact their pensions make on the world.

“It’s also clear that older generations do care about doing the right thing with their money, but they are more likely to prioritise issues where they have real-life experience or see a financial impact.

“In particular, women who have decades of lived experience in the workplace are most aware of the difficulties that poor governance and pay policies can have.

She continued: “While this research was conducted prior to the global pandemic, we’re seeing the same trends only further highlighted in recent weeks. Social and governance issues appear to have risen in importance for all demographics.

“With a spotlight now being shone on these issues, we believe that fair treatment of employees, particularly around pay and poor labour practices, will continue to gain prominence among members of all ages.

“Our survey shows that there are many different views and issues at play under one ‘environmental, social and governance’ banner.

“Taking appropriate action through all the tools available, particularly through engagement, will be key in contributing towards the building blocks of a better future as we emerge from this crisis.”

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