Last updated 19 December 2018
Providing for your own future need not mean you have to compromise on your principles. Saving into a pension is a wise decision, and one you should prioritise at an early age to ensure that you take full advantage of tax breaks and capital growth.
You can build your own pension portfolio using any number and combination of sustainable funds, trusts and shares through a SIPP (self-invested personal pension) – see the latest Good Investment Review for more – or through a normal private pension.
Here are some of the more traditional options to consider.
Run by Legal & General and launched relatively recently in response to demand from the digital platform’s customers, the Future World Plan invests in companies generating revenue through low-carbon activities. The firm says it seeks “investment value, quality and stability,” with a special focus put on businesses that are environmentally friendly.
It comes with a slightly higher fee than the platform’s other plans at 0.95 per cent for the first £100,000 of savings, but this is still pretty low relative to the rest of the pensions world and falls to 0.47 per cent for savings over £100,000. Your money is invested globally in over 3,000 companies, that are screened against a set of environmental criteria.
NEST, the National Employment Savings Trust was set up by the Government as part of its commitment towards auto-enrolment. Its 0.3 per cent annual management charge is one of the lowest on the market, though there is a 1.8 per cent charge for contributions. It is also free to transfer existing pots in.
The ethical fund, which NEST says is slightly higher risk than its standard fund, invests in companies with positive records on human rights, fair labour practices and fair trade policies – especially with developing countries and the environment.
It avoids investing in tobacco, arms and corrupt states including those with a bad human rights records, as well as companies that damage the environment. The fund has grown 11.7 per cent a year since launch, making it a better performer than NEST’s other funds (except for its Sharia offering).
Read the Good Guide to Pensions, from Good With Money, here
Pensions giant Aviva has a number of ethical funds that can go into a pension. Top performers with strong sustainable investment policies include the Liontrust Sustainable Future range, all of which are available through Aviva. Others include Royal London Ethical Bond, Rathbone Ethical Bond, Axa Ethical Distribution and Kames Ethical Cautious Managed. For more on these funds and more, see Good With Money’s latest Good Investment Review.
Royal London runs both a workplace and a personal pension plan. The former will be decided by your company while the latter is available to buy through a financial adviser. The firm has a number of ethical and sustainable funds, including its ethical bond product (see above), as well Royal London Sustainable World and UK Ethical Equity. It is ranked highest by Ethical Consumer in its pensions provider category, scoring 12 out of 20 thanks largely to its status as a mutual firm.
The Henderson Global Sustainable Equity fund is an offshoot of the Janus Henserson Global Sustainable Equity fund and is available through the Zurich pension scheme. After the Liontrust Sustainable Future range available through Aviva, it is one of the better ethical pension funds. Unlike most, it does not invest in oil and gas with the manager seeking to actively invest in global companies whose products and services are considered as contributing to positive environmental or social change. It also regularly publishes all of its holdings as well as a positive impact report.
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