More than two-thirds (69 per cent) of workers aged between 16 and 35 with a defined contribution (DC) pension want their pensions to be invested to directly benefit the environment and local community, according to data from Gresham House.

By comparison, 57 per cent of respondents across all age cohorts would support their pension scheme adopting a place-based impact investment approach.

The investment manager also found that nearly a third (30 per cent) of younger workers would increase their pension contributions if they knew the funds were being invested in companies and projects that drive positive environmental or social change in their local area.

This figure falls to 23 per cent when looking at all age cohorts.

Gresham House stated that, with the majority of people at risk of missing out on an adequate retirement, it was critical that the government and pension providers took steps to encourage greater saving for retirement, and connecting pensions to positive benefits could be a key tool to enable this.

Fifteen per cent of those aged 16-35 would be prepared to pay higher management fees if they knew their pension scheme was investing more into place-based impact investments, compared to 11 per cent across all ages.

More than half (55 per cent) of younger workers often think about what the world would look like when they retire, higher than the all-age average of 48 per cent.

“UK pension contributors want change – they want to see their money drive positive impact, closer to home,” commented Gresham House managing director of sustainable infrastructure, Peter Bachmann.

“It’s no surprise to see this coming through so strongly from the younger generations - purpose is a driving force in the decisions they make, and pensions are no different.

“UK employees need to be saving much more each year to ensure a comfortable retirement and these findings show pensions providers what they can do to make that happen.

“Fixing our biggest challenges - whether environmental or societal - will require innovative new solutions.

“Alongside the Chancellor’s newly unveiled plans to deliver the Mansion House reforms, these findings highlight that the demand is there for a new approach - one that provides returns for contributors, as well as driving solutions for some of the critical challenges facing the UK.”

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