Executive summary
Published 7 October 2024
© Crown copyright 2024
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This publication is available at https://www.gov.uk/government/publications/applying-behavioural-insights-to-green-pensions/executive-summary
The UK’s £3 trillion of pensions investments have a fundamental role to play in the UK’s transition to net zero. This project aims to understand how members of Defined Contribution pension schemes might contribute to that transition through their choice of funds by examining whether and how they can be engaged with directing their pension savings towards more environmentally sustainable investments. Sustainable pension funds (or ‘green pensions’) in this context refer to funds that are invested based on environmental criteria, such as a commitment to net zero across the whole portfolio and investments into climate change solutions.
This report presents the findings of the project’s main components: an evidence review, qualitative interviews, a large-scale survey on what hinders and what supports consumer engagement with the environmental sustainability of their pensions, and a randomised controlled trial (RCT). The RCT tested different communications from three pension providers (Aviva, Smart Pension and Hargreaves Lansdown) to their members, encouraging them to log into their pension portals to check their pension’s performance as well as to seek information on increasing the sustainability of pensions.
In line with existing research, we find that general engagement with pensions is low. We find that scheme members are more engaged with the financial performance of their pensions than the environmental performance of the investments and that light-touch communication-based nudges are not a promising avenue to shift pension investments towards more environmentally sustainable funds. The control email which focused on pension performance and did not make any explicit reference to pension sustainability consistently demonstrated higher engagement among pension holders in terms of open rates and clicking on links embedded in the email.
Given the low consumer engagement with the sustainability of their pensions, our findings suggest that to make meaningful progress towards aligning pension investments with environmental sustainability, interventions further upstream are needed. This will require further research to understand the role of key players including employers, pension providers, trustees and government, in increasing the environmental sustainability of investment funds, with a focus on default arrangements.