Ethical Pension Funds

ikr2

I started working for a small firm just over a year ago and had to sort out my own pension plan (I had been in my old employer's one up to that point). I took out a private plan on the advice of my IFA (a pension specialist).

He wrote off ethical funds when I mentioned them. Do they really perform as badly as that? Should I junk him and find an IFA who knows about ethical pension funds?

It was my New Year's Resolution to go ethical in my current account and elbow Lloyds TSB and move to Smile. I'm about to finally sort that out. Then I thought about my pension too........

dunstonh

If you want ethical then you should have ethical. However, you do need to be aware that the range of ethical funds is more limited and you will be leaving holes in your portfolio which could impact on the performance.

margaretclare

Hi

No advice mind, but I've got F&C Stewardship Income, and that's doing pretty well. I've also got Aegon Ethical Corporate Bond (Income) and Aegon Ethical Equity Fund.

Smile also have their own fund supermarket.

I agree, if you want to go ethical then go ethical! The IFA is only giving his opinion. You don't have to agree.

Best wishes

Margaret

Sharpie

Hi IKR2,

As with all stockmarket based funds (pensions or otherwise), there are good ethical ones, and not so good ones.

The risk comes in two parts- firstly, as dunstonh said, there are not many truly ethical (or "socially responsible") funds on the open market, so you are limited in that way..and it has affected performance in the past, so you have to select carefully.

Also, you have to look at how the investment houses are choosing the underlying companies to invest in- it's called either positive or negative screening. This can also increase the risk, because companies have differing definitions over what is "ethical". You should always look at the top 10 holdings of a fund before you invest.

For example, it could be argued that Tesco's is an ethical company, because it has good working practices for employees etc..on the other hand, they sell tobacco and meat (and some would say shaft suppliers). BT supplies communications infrastructures to 3rd world countries, but has also supplied the Armed Forces..

Friends Provident have whats called Responsible Engagement Overlay (REO trademarked), which they apply to all their funds as far as possible, even those that are not deemed to be "ethical"..it basically means that they encourage companies to look at their socially responsible stance.

Some pension companies only pay lip service to ethical funds, and might just have one in their portfolio, others specialise, so you need to have a company that offers a good selection of all the options.

Have a look at https://www.eiris.org The personal finance page has a good explanation of everything.

It's like all aspects of financial planning really- don't put all your eggs in one basket..

Hope this helps

margaretclare

Hi ikr

I would suggest you have a good look at Friends Provident, mentioned by Sharpie above.

The name 'Friends' implies Quakers, and that was their origin. Strangely enough, Lloyds, whom you're going to kick into touch, also has Quaker roots way way back.

I started a stakeholder scheme with FP about 4 years ago, in their Stewardship scheme. It did pretty well, I was happy with it. Following 'A' day I transferred the whole pot to a H-L SIPP where I have an equity ISA as well, and where I have the choice of what funds to invest in. One which is doing well at present for me is F&C Stewardship Income. I understand that F&C are managed by the same people who manage FP. Of course, I'm no expert, correct me if I'm wrong, but I'm happy about all this.

But....this is the biggest but - all this has been from retirement income which I'm getting already, the SIPP is treated just as 'holiday money', I don't need any more income to live on, which is the biggest difference between myself and someone half my age.

However, one has to live with one's conscience.

Best of luck

Margaret

snaffler

Try here http://www.ethicalinvestors.co.uk/ I have used them, good info sent out etc.