Many employees are subscribed to their workplace pension, managed by investment firms like Royal London or Legal & General.
In the case of Royal London, unless you have requested any different (either personally or via a financial advisor) you will likely be paying into a default investment.
Whilst this default investment is somewhat complex and changes over time, the specific details of your pension investment requires a bit more digging. For example, if you are 15 or more years from retirement, your pension will be invested predominantly in stocks & shares (72.5% of total sum) in something called RLP Global Managed.
RLP Global Managed is a fund made up of hundreds of individual stocks & shares, of which the top 10 holdings are published via the fund fact sheet. This fact sheet reveals that your pension is directly invested in BP (1.45%) and Royal Dutch Shell (1.31%) which might not be suitable for your stance on sustainability.
Furthermore, depending on your personal ethical investment preferences, other investments in the RLP Global Managed fund might raise an eyebrow too.
It is possible to switch funds and move your pension investments into different markets, either directly with Royal London, or as a partial transfer to a self invested pension portfolio (SIPP). A partial transfer allows you to ‘withdraw’ up to 90% of your current pension and transfer into a SIPP of your choice.
SIPPs are a great option if you can devote a few hours to research, and can actually increase the value of your pension by paying less fees to your provider. For example, Royal London’s managed workplace pension carries a 0.75% ongoing fee, where a SIPP can be as low as 0.15%.
This might not seem like a significant saving, but over a 30 year period this can add up to thousands of pounds due to the wonders of compound interest.
There are a number of SIPP providers in the UK, many of which offer free accounts with low ongoing charges. Most SIPP providers offer a recommended ethical investment portfolio, or you can build your own if you’re up for it. A few SIPP providers:
Alternatively, you can consult a financial advisor who will likely charge for the pleasure.
Please note this is not considered financial advice. It is however a widely recognised option for people all over the UK.
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