Our pension assessments app will make it as easy as we can for you to check whether your current pension is green or not. So if it tells you your pension could be invested more sustainably, how do you make a change?
To give you an example, here’s how I made my move to a greener workplace pension, shifting from the default to the green option within the Aviva pension scheme provided by my last employer. Not every scheme will work in the same way, but the process you would need to follow to adjust your pension should be quite similar.
Accessing your pension
First things first, you need to get access to your pension’s online account! That can take a little time. My access to my account had lapsed and I had to wait for new credentials to arrive in the post. This can take a while – I had to wait a few weeks, but hopefully you will get your details more quickly.
Like many providers Aviva allows you to select from a set of pre-designed plans – investment strategies designed by fund professionals based on the number of years you have before retirement – or to choose your own funds. Aviva lets you construct your pension from a selection of some 230 funds, some managed by Aviva, some by third-parties.
Selling your existing funds
If you want to go ahead and make a change you’ll need to sell your holdings in your existing funds. This releases the money you will put in the funds that will comprise your new, greener pension. You don’t need to sell all the money in all of your existing funds, but you do need to sell something in order to free up sufficent resources to set up your new pension. The screenshot below shows the options Aviva provides – your provider will offer similar options.
Choosing the funds you want
Once you’ve sold some or all of your existing funds, you to choose the funds you want to switch to. Your options will look something like the screenshot below, with a search box and filter options allowing you to create a custom table of potential funds to review.
You’ll have to do a little bit of work to assess which funds are green – they won’t be highlighted in bright green text unfortunately! Start by opening the fund’s factsheet. This will list its top 10 holdings – the main stocks in which the fund is invested. Some of these companies will be familiar, but others not so much.
So to get a better sense of the greenest options available to me I looked at what fund managers with good green reputations are doing: I searched for the names of green funds I was aware of, like BMO Responsible, Jupiter Ecology, Lionstrust and Aviva’s own Stewardship, and looked at their fund factsheets. Once I’d taken a note of that I was better able to choose the most sustainable Aviva funds. I selected four funds that I thought offered solid green options, and that had something like the geographic spread I was looking for.
In following this process I’m well aware that I had the advantage of knowing how to compare the options that Aviva gave me with the funds that I know to be sustainable through past experience – as someone who works in finance and has become comfortable making my own financial decisions, I have made fund selections on other platforms before.
So what do you do if you don’t know how to make that comparison? One thing you could do would be to list all 230 funds available on Aviva and then pick out those whose titles include green investment buzzwords like ‘ethical’, ‘sustainable’, ‘stewardship’, or ‘responsible’. You can also, of course, ask a professional adviser – your pension company should be able to give you some guidance. We plan to provide information on individual funds in a later version of the app so stay in touch!
Once you have decided on your chosen funds, you will be asked to confirm your choices and your ‘allocation’ – the percentage of your savings you want assign to each fund. Your pension provider will take a few days to execute your choices and then send you a simple confirmation statement.
Checking your pension
You can login to your account any time to check your pension’s status. You will also get an annual statement through the post. Aviva’s statement lists my chosen funds and how much I have in each one. Unfortunately they aren’t labelled as clearly as they could be. ‘Series 6 AvLionSFAbsolGrthS6’, for example, appears on mine: it’s not at all obvious what this is! One of our goals at Go Invest Green is to highlight the need for funds to be much more transparent. Things are slowly getting better though. Aviva for example offers a Stewardship Lifestyle Strategy which presents a reasonably straightforward green alternative to their default pension plan.
I hope this little summary of my experience with one of the big providers has helped indicate what’s involved in changing your pension within a typical workplace pension framework. Our pension assessment app looks at Aviva and nine other of the UK’s best known workplace pensions. But just to be clear, we can only provide information, not advise you on what to do personally.