Pension Fund - Ethical Funds & Start Up's

makingtrails

Hi,

I work for a small business who are now only just introducing a pension fund due to the government's work based pension requirement.

I have been advised that the pension provider is chosen by the employer and that I will have options regarding which funds I choose to invest in however they may be limited.

As a individual, many of the choices I make are highly ethical. For example, I choose to work for a small local business, rather than a multi-national corporate, I shop locally where ever I can and try to avoid purchasing products from companies who a) Exploit people for profit b) Pollute the environment c) Avoid corporation tax.

No Apple iPhones, BP Petrol & Starbucks for me then.

So when it comes to investing in my pension are there any ethical solutions I can make? would be good if I can invest in funds which

a) provide finance for local business
b) do not invest in unethical companies
c) invest in startups

Thanks

J

dunstonh

So when it comes to investing in my pension are there any ethical solutions I can make?

Depends on the scheme.

However, every ethical investor has different ethics. So, one ethical branded fund may be suitable for one person but not another. There is a filtering process in place for advised clients that identifies a range of ethics and funds that meet that criteria. However, on an employer scheme, its highly unlikely you will get anything more than a generic ethical fund at best.

princeofpounds

Alas one of the downsides to working for a small local company is that they are unlikely to be sophisticated enough to obtain a pension scheme that is itself particularly sophisticated.

Although what you ask for is really quite niche and most pension schemes will offer nothing more than a couple of generic 'ethical' funds at best.

You should probably just focus on achieving the best ethical result you can in the framework you find yourself in. Actually trying to pursue these objectives would be costly, difficult and probably not worthwhile for anyone given the small sums likely to be involved.

PS investment is not like food miles. Is it particularly unethical to invest in developing countries for example? Such capitalist-driven globalised investment has lifted more people out of poverty than charity or socialism ever has. Those are the sorts of things you might want to ponder on, if you want to spend much time on it!

mania112

Your ethical views are extremely strict.

A standard ethical fund will normally only consider Arms, Environment and Cruelty to Animals.

Personally, I think not picking Starbucks because they 'exploit' tax law is pathetic - but you're entitled to your opinion, i guess.

Point is, you won't find a fund that you 100% support, and you won't be able to cherry-pick your favourite shares - the company pension won't be sophisticated enough.

You can also pick 'ethical holes' in almost any firm, if you try hard enough.

margaretclare

I look for ethical funds which do not invest in tobacco, gambling or pornography.

mark55man

I try to be ethical in my personal life - but more in "do as you would be done by" sort of way

I work for companies with CSR (however hammy that may be) and was delighted when my eldest kids got jobs with John Lewis Partnership - although I guess many of their products may be unethical by your definition

You could try technology - they usually try not to be evil - but as above in a small pension fund a pure play tech fund is unlikely to be available (and almost certainly not sensible)

When it comes to investment - and I know you may think me unethical - you should probably go for the least bad, and then focus your ethical investment in S&S ISA's where you have more choice

For me and forgive the slang speak - my investment enlightenment (with my high risk asset portfolio) was when I allied myself with the finance-industrial combine and started playing the game with "the man" - rather than trying to fight him - so for the last 2 years that has been banks, markets supported by QE (= Japan / USA)

mark55man

Also I should hasten to add, I have met some pretty unethical smaller companies in my life, flouting government policy and tax law in a fashion that leaves multinationals in awe. That in heart is one reason why I find it hard to accept "ethical financial products" - in the same light as I would refuse to accept vegetarian advice from a pride of lions (and for much the same reason).

Wasn't it Woody Allen who said "and the lamb may lie down with the lion, but only one will get a good nights sleep"

grey_gym_sock

as has been said, it's difficult to find ethical funds that match your ethics (partly because everybody's views are different). 1 of the reasons that i hold shares in individual companies is so that i can apply my own ethical filter when selecting companies. but when i do hold funds, i don't use "ethical" funds, because they don't match my views at all.

however, you need quite a lot invested (i'd say at least £30k - some would say more) to make it practical to use individual shares. and it takes more effort. and most pensions won't let you do it at all (SIPPs will).

it's also a good idea to have some international diversification when investing - i.e. not put everything in UK companies. but buying individual overseas companies involves further complication, research, expense, etc. for these kinds of reasons, i'm holding funds investing in overseas markets, along side my individual shares in UK companies.

in your situation, i would probably not even try investing this pension ethically initially. but if i built up a large enough pension pot, i might later transfer it to a SIPP, where i could put some of it in individual companies, and apply an ethical filter when selecting them.

mania112

To add to this, there are companies out there who take advantage of people looking for ethical investments.

Steer clear of anything if you see the words 'bamboo' , 'carbon credits' and 'teak plantations'