Pension savers are apparently turning their attention towards environmental, social and governance factors amid the increasing prevalence of ESG investing.

Two-thirds (67 per cent) of consumers believe it is important to consider ESG factors before investing, rising to seven in 10 (72 per cent) for those with a pension, according to a survey from Aviva last year.

When it comes to defined benefit pension funds, it will be down to the trustees who take advice from a consultant to decide what to invest in, says Karen Shackleton, director at Pensions for Purpose, an organisation that encourages the flow of capital towards impact investment. But for a defined contribution investor, it will be their decision on what to invest in.

Around nine in 10 DC savers remain in their scheme’s default fund, according to Lauren Wilkinson, senior policy researcher at the Pensions Policy Institute.

“For some this will reflect an active consideration that the default fund is likely to be most appropriate for their saving needs,” says Wilkinson. “But for many savers, remaining in the default fund is more likely to be the product of the same inertia that has made automatic enrolment so effective in increasing pension coverage.

“Although it is worth saying that, given low levels of knowledge and understanding around pensions and investment among savers and the way in which default funds have been designed to meet average members’ needs, active decisions about switching funds may not be beneficial for most savers.”

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