Three-quarters of people prefer a social investment fund for their pension scheme
More than three-quarters (77 per cent) of people would rather contribute to a social investment fund rather than a conventional fund when asked to select the default fund for a defined contribution pension scheme, according to new research.
Standard Life Investments surveyed 1,000 people on saving in defined contribution (DC) pensions and found a majority of 77 per cent favoured a social investment fund over a conventional fund. Some 44 per cent of respondents still preferred a social investment fund when told they would receive an 8 per cent smaller pot at retirement.
And over 30 per cent of respondents still chose their social investment fund even when outcomes were much lower by 18 per cent.
Currently, most members of DC pension schemes (73 per cent) select the default fund they are offered. But the report warns that distrust of the pensions industry is currently the most powerful driver for people opting out of auto-enrolment and suggests it can regain customer trust through engagement.
Of those surveyed who would favour a social investment fund, 44 per cent of respondents would choose sustainable or environmental funds, 33 per cent would choose a fund that invests in housing and infrastructure, and 23 per cent would choose a fund that invests in local businesses.
The report also found variations in appeal for different types of social investment funds for the differing sexes and age groups.
There is a strong female and 25-34 year old bias towards a ‘local communities’ fund, while a ‘local business fund’ had a greater appeal to men and those aged 35-44.
The research, Identifying new ways to engage with savers in defined contribution pensions, was commissioned by the Defined Contribution Investment Forum.
This article was taken from Civil Society – http://www.civilsociety.co.uk/finance/news/content/14675/