An employee pension scheme is a great opportunity to incorporate environmental, social and governance (ESG) criteria, for charities of all sizes.
Discussions about your charity’s employee pension is a useful way to engage your employees on ESG issues. Charity employees in particular are likely to be more concerned about ESG issues.
Since the introduction of auto-enrolment in pension schemes from 2012, employers must ensure that their employees are enrolled into a workplace pension scheme unless they decide to opt-out.
Pension contributions made by the employee, employer and the government (this payment is known as tax relief), has risen to a total minimum of 8% of qualifying earnings from April 2019.
If your charity provides an employee pension, the first step will be to assess your current pension scheme through an ESG lends. You can check with your pension provider on its ethical investment policy.
If you are unsatisfied with the ESG criteria of the pension scheme, ask your provider if there are any alternative ethical options that your employees could switch too.
It can sometimes be difficult to gather the relevant information from your pension provider. If you feel your provider does not have an adequate ethical policy and cannot provide you with a satisfactory alternative option, you can look into changing pension providers. How quickly you can do this will depend on the specific contract you have with your provider.
An independent financial adviser (IFA) can help to identify pension funds which incorporate ESG issues.
ShareAction has created a Pension Power Toolkit which describes the steps you can take to incorporate an ESG criteria into your charity’s employee pension scheme
Make My Money Matter campaign for greener and more transparent pensions. They have created a ‘Green Pensions Charter‘ which asks organisations to commit to work towards greening their default and defined benefit pensions, by aligning them with net zero targets. It also calls on the pensions industry to commit to a net zero future.
The pension service has been set up by Government, and its website includes information and advice for employers and employees on workplace pensions.
The People’s Pension is a large workplace pension scheme that provides resources on understanding responsible investing within the context of employee pensions.