I was struck by this post by Chis Eastwood who has every advantage over me other than the experience of growing old!
Here is a challenge for a pension scheme that serves me and my 28 year old son. He has a value set which puts him in the third of people who chooses a job on the way the employer behaves. Everything is at the touch of his finger, he cares about his society, environment and the way he is governed. He is idealistic and the reality of getting old for him – is long away,
Maybe the idealism of youth gives way to the pragmatism that 64 years olds have, to me a pension must pay me what I expect of its but that doesn’t stop me not wanting to invest in noxious things. Maybe I choose not to invest in fossil fuels because I see the risks more financially than ecologically and maybe its the other way with my son. But that’s how we prioritise things at different stages of our lives.
A “whole of life” pension should be one that gets its members approval when they join at one end of their careers and is still getting it right up to 40 years later. The harsh reality is that your boss is likely to change over 40 years and so is your pension but that does not mean that those who invest your money cannot set out to meet the needs of all the scheme’s members.
Penfold, fronted by Chris, have discovered a third of its savers choose their employers for their behaviour and it would be good to think that part of that choice was around the pension that the boss had chosen for the staff. We know however that either knowledge or interest in the pension scheme is minimal, we know that the vast majority do not choose where to invest but use the default fund. This tells me that a collective fund where everyone is invested in one fund could be run with no interest in pleasing the third of Generation Z who do give a damn.
But that should not be good enough for trustees if they see good environmental policy, good governance and good investment in society as likely as good for everyone in the long run. My common sense tells me that our environment , our way of behaving and our investment in society will lead to better outcomes for both my generation and my son’s.
And of course a pension scheme has as its aim to be fair across generations. Right now I see DC schemes investing into the kind of growth assets that please my son and then de-risking into different vehicles that I find hard to call “investments”. It is called “lifestyle” investment which (among other things) means de-risking funds from the idealism for a better environmental, governance and social investment strategy.
I do not think that lifestyle changes like that. There are 30 years between me and my mother she at 94, shares the same value set as I do and I do as my 28 year old son does.
We all want better values in our investments even though we know we have a relatively short life ahead of us. That is because old people want an inheritance for their children and grandchildren that gives everyone the same improvements.
This is not me having a go at Chris or Penfold, far from it, they – like other firms like Pension Bee offer savers an access to investments that matter and occupational “whole life” schemes that aspire to look after Gen Z as well as pensioners had better look and learn from such firms.
I hope that this will encourage the workplace pensions like Penfold and Collegia that provide a service for young companies, young employees and those that have the pure idealism of youth to feed into whole of life schemes to make my and my mother’s funds as progressive as theirs. I see some of that spirit when I meet people from some large DC and DB funds. I know it can be done but we must learn from people like you!