Defined contribution (DC) pension scheme trustees must be aware of the risk of climate change to younger members and should not ignore intergenerational risks, HS Trustees has said.

The trustee firm argued that younger pension savers are already making it clear what they want their money to do, with the majority of under-40s stating that they care about climate change.

“They want their savings to deliver purpose, impact, and value — not just financial return — and they want to be able to retire into a liveable world, not have to adapt just to survive in a damaged one,” HS Trustees said. “It is not either/or — it is both. And it is urgent.”

Indeed, the group warned that avoiding this issue could exacerbate the intergenerational gap, explaining that if schemes continue to invest ignoring the hopes and values of younger members, they could risk losing not just engagement, but trust.

“We risk managing assets that will fail to support a sustainable, resilient future for those who will live with the consequences of today's decisions,” HS Trustees continued.

“Yet many members still find themselves invested by default — not by choice, but because they lack the technical expertise, confidence, or support to make active investment decisions.”

Given this, HS Trustees argued that default funds need to evolve to move beyond just financial objectives to strategies that align with members' values, deliver measurable real-world impact, and help secure a sustainable future.

HS Trustees stated: “Today’s defaults too often lag behind what members actually want — and what the future economy demands and requires.

“If we want to stay relevant and truly engage our members, we must mind the gap — and close it. Our economy needs this funding as well.

“That starts by listening: surveying members to understand what motivates them and what they expect from their pension savings.”

The group also argued that this issue will not be solved by better communications alone, stressing that a fundamental shift is needed in how the industry assesses and values investment offerings.

“Products must be evaluated not only on financial metrics, but also on their ability to support the sustainable transition, manage systemic risks, and deliver better real-world outcomes — for members today and for generations to come,” the group stated.

---