Nearly half (40 per cent) of defined contribution (DC) savers admit to not knowing whether their pension is invested responsibly, while 26 per cent assumed that it was but were unsure, data from the Financial Conduct Authority (FCA) has revealed.

Analysis of the FCA's annual Financial Lives Survey by Broadstone found that 17 per cent of DC savers were sure that their pension was invested responsible.

However, even among those who said their pension was invested responsibly, or assumed it was, two-thirds (33 per cent) said that they did not make an active investment decision but just assumed that either their pension provider invests this way, while a further 33 per cent said their employer chose a pension provider to invest in this way.

This is despite further statistics from the FCA’s data suggesting that responsible investing can drive positive savings behaviours, as nearly two-thirds (63 per cent) of DC savers said that they feel or would feel more engaged with their pension overall if it was responsibly invested.

In addition to this, over four in 10 (41 per cent) said they would pay more into their pension as a result of it being responsibly invested.

Commenting on the findings, Broadstone head of DC workplace savings, Damon Hopkins, stated: “Responsible investment is fast becoming well and truly entrenched in the design and selection of pension investment strategies – and rightly so.

“However, the type and extent of integration of responsible investment factors varies significantly and many pension savers are blindly assuming their pension is invested responsibly, banking on the good intentions of their employer or pension provider.

“We expect scrutiny over responsible investing to intensify amongst savers, so providers and employers (and their advisers) will need to be able to clearly evidence and articulate their investment profile and its wider ESG benefits.

“As this issue snowballs in prominence we believe it could become a key area of risk and differentiation, as savers increasingly focus their savings in investments that provide long-term real returns and make a positive difference to society and the environment.”

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