Nearly three-quarters (72 per cent) of UK employees said it was important that their employer offered a 'responsibly invested pension', research from Scottish Widows has revealed.

However, almost half (47 per cent) didn't know whether their workplace pension was invested responsibly.

The Scottish Widows' Responsibly Invested Pensions Report surveyed more than 6,000 employees, employers, and financial advisers to better understand their views of environmental, social, and governance (ESG) issues, revealing evidence of a knowledge gap about responsible pensions and a divide in perceptions of the benefits they could provide.

When asked about the most significant issues facing society today, the cost-of-living crisis topped the list for almost two-thirds (63 per cent) of employees, with 49 per cent believing this will be society's biggest issue five years from now.

Other environmental-related issues, including climate change (44 per cent), plastic waste (37 per cent), and water pollution (33 per cent), were closely followed as top concerns for employees.

Social issues - including diversity, equity, and inclusion - were the biggest societal issues among younger respondents.

As a result, 70 per cent said their employers' social responsibility credentials or benefits were important in choosing their current role.

Younger employees placed an even greater emphasis on responsibly invested pensions.

Over three-quarters (79 per cent) said it was important for their employer to offer a responsibly invested pension, compared to 61 per cent of those over 55.

Two-thirds (64 per cent) also expected their employers' environmental and social responsibility commitments to be reflected in their pension portfolios.

Scottish Widows head of responsible investment, Eva Cairns, said employees were increasingly seeking to ensure their investments delivered financial return while considering the impact on people and the planet, with a clear demand for more responsibly invested options.

"We know pension savers are concerned about financial security and believe that considering risks and opportunities related to ESG can help build more resilient investment portfolios – but it's also about contributing to a more sustainable future, tackling some of the societal issues people care about," she stated.

While the report highlighted strong employee demand for responsible pensions, lack of awareness and education remained key barriers.

Nearly two-thirds (61 per cent) didn’t know how to switch from their default pension to an alternative investment option that may be better suited to their objectives.

Less than a quarter still held concerns about whether responsible pensions had comparable returns to traditional investing (23 per cent) or whether they cost more (21 per cent), and one in four (25 per cent) stated that they did not have enough information about responsible pensions to understand their cost and benefits.

"There's still a big knowledge gap to tackle," continued Cairns, "and employers should not only offer responsible pensions but also do more to empower employees with the information they need to make more informed decisions."

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