We still see ridiculous pricing in the market, which is not an incentive
to invest more. Paul Bucksey, Smart Pension
tion-linked return target for our growth funds. We look to invest in inflation bonds and swaps as well as com- modities, excluding fossil fuels. We invest in a mix of assets that fit into that range of buckets which together give us that inflation-linked return.
That has become more difficult, but it is core to what we are trying to do. Bucksey: You cannot expect to turn members into CIOs. It is tricky to get your head around. The key is not over communi- cating. Making sure that you are doing the best you can for them in how you put things forward. We have tried loads of things. Our members get an app through which we do lots of nudging. We try various tactics to wake them up to doing something. It is difficult to get younger peo- ple to engage. They are busy; life gets in the way and there are other calls on their money.
I wonder if ESG is a potential silver bullet. The world is on fire and you cannot get away from flooding in the news. A propor- tion of our members tell us they care deeply about it; equally a proportion of our members do not seem to care as much. It is not one-size-fits-all, but neither is life. Pulling on ESG to try and get members to take more interest in their finances over- all, is going to have a beneficial impact on the pension. Then there is the cost-of-living crisis. People will say that you need to upgrade to a heat pump, you need to get an electric vehicle, but they cost a lot of money. What you could do is tell people they could have a positive impact by making sure that
16 November 2022 portfolio institutional roundtable: Defined contribution
their pension is invested in a sustainable way. You build that story by explaining how much carbon they have reduced from investing in a wind farm, or they are helping to build social or affordable houses. That will, over time, get peo- ple a bit more interested, building up pride in the way that their money is being invested. Humble: These themes resonate in our research. Interestingly, they resonate across ages. Climate and environmental topics matter more to younger members, but the social and govern- ance side is favoured by older members, for whom that is lived experience.
That is intuitive. The gender pension gap resonates with older women, for example, because, again, that’s their lived experi- ence. We should not think that this is just for younger members. Bucksey: The other question we have asked is: to what extent would you be happy investing in a sustainable way if it meant getting a lower return or paying more in charges? It comes back to what do people really think. It is interesting that most master trusts and other providers are seeing out- flows to the consolidators, which have charges comfortably above what they have been paying in master trusts. So we know that price does not seem to be the key issue for members, but this is not one-size-fits-all. A survey of ours found that about 42% of respondents would be happy to invest in something for the good of the world, even if it meant getting a slightly lower return. Those wanting to focus on the invest-
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