Join us for this workshop if you’re interested in a learning and strategy discussion about green reform of the UK pensions system that we could collectively push the next government to adopt. As you’ll know this is a hot topic, with the government making pensions a centrepiece of the Chancellor’s Mansion House speech, and the Shadow Chancellor announcing Labour would undertake a major pensions review if elected.
WHAT: Workshop on developing an agenda and campaign for fixing the UK’s failing pension system, so it works for the planet, as well as pensioners and the economy
WHEN & WHERE: Thursday 18 January 2024, 1400-1600 on Zoom.
WHO: Make My Money Matter, ShareAction and Finance Innovation Lab invite all those interested in fighting for reform to UK pensions system to make it a driver for the just, green transition. The workshop is an opportunity to learn and share perspectives about the current pensions system and options for reform, and discuss strategic approaches to winning change under the next government.
UK pension funds hold over £3 trillion in assets, but they are failing to support a just, green transition. The UK has the largest pensions market in Europe and the second largest in the OECD which means the investment strategies of UK pension funds have a major climate and environmental impact. Make My Money Matter estimate £300 billion in UK pensions are invested in companies with a high risk of driving deforestation and over £88bn in the fossil fuel industry, ten times their equity investment in FTSE 350 clean energy stocks. The Climate Change Committee has estimated that the UK will have increase its low-carbon investment each year from a £10bn baseline in 2020 to around £50bn by 2030. Pension funds should be a key source of capital for this investment, and also for global investment in the just green transition, but they are not yet doing this at sufficient scale. The pace of change in the industry is very slow. Of the 20 providers in Make My Money Matter’s 2022 Climate Impact Report, 60% had not published 2025 emissions reduction targets, none had explicit policies for ending fossil fuel expansion, and 80% had not made public commitments to eliminate deforestation from their portfolios (Make My Money Matter 2022).
The UK’s pension system also provides a very poor deal for pensioners and pension savers, and exposes the economy to risks. The bottom half of the population holds just 1% percent of pension assets and will thus remain dependent on the state pension which is one of the lowest in Europe. Even worse, over 80% of the population that have only Defined Contribution pensions, which have become the norm, are not saving enough to have what the public believes is the minimum acceptable income in retirement. At the same time, the pensions system can become a source of major economic instability, as shown last September when the Liability-Driven Investment (LDI) pensions crisis – sparked by Liz Truss’s mini-budget – was only prevented from turning into a full blown financial crisis by massive intervention by the Bank of England.
The next few years present a rare opportunity to influence major reforms to pensions policy. In addition to the growing crisis highlighted above, both political parties have major – though not yet well defined – plans for pensions reform, seeing pension fund investment as key to their economic growth plans. The Chancellor recently called for ‘freeing up’ pension funds to invest in a wider number of assets, including illiquid investments in infrastructure, while the Shadow Chancellor said she would conduct a major review of the system if elected, and made pensions reform central to her growth plans.
As a movement, we cannot afford to miss this golden opportunity to influence this window of change and shape the future pensions framework.