Two of the UK’s biggest pension investors are calling for schemes to do more to communicate how they are investing in asset classes such as infrastructure to boost engagement and understanding among members.
Nest and Border to Coast Pension Partnership, along with asset manager IFM Investors, commissioned a survey of 2,000 defined benefit (DB) and defined contribution (DC) pension scheme members, conducted by Ignition House.
The survey found that more than four in five (82%) wanted to know more about how their pension was invested in infrastructure.
“As schemes explore long-term opportunities, we must help members understand the benefits of these investments and the role they can play in delivering value for members over the long term.”
It follows similar research published earlier this year by Mortar Research, which found that 83% of 2,005 UK savers felt it was important to know where their pension was invested. However, just 24% said they actually knew.
Ignition House’s research indicated that better communication around private markets investments could boost support for domestic allocations to infrastructure. It found that members tended to feel more positive about such investments after seeing case studies and examples.
Over the summer, Nest sought to highlight its domestic investments through a campaign in conjunction with TV presenter Brendan Sheerin, a tour guide and host of the long-running Channel 4 series ‘Coach Trip’, to show Nest members where their pensions were invested.
Nest chief investment officer Elizabeth Fernando said: “Around 8% of our assets are already invested in UK private markets, helping finance the homes, transport, energy and digital networks communities will rely on in the years ahead.
“Clear, accessible information can help savers see how their pension supports local communities and connects to their financial future. As schemes explore long-term opportunities, we must help members understand the benefits of these investments and the role they can play in delivering value for members over the long term.”
In a joint press release, Nest, Border to Coast and IFM said the research “suggests [that] pension providers may be missing a major opportunity to engage members”.
Ewan McCulloch, chief stakeholder officer at Border to Coast Pension Partnership, said Local Government Pension Scheme (LGPS) members were typically more engaged with their pension funds than workers in the private sector, leading LGPS funds to be “proactive” in their communications.
“There is always more to do – and it’s also true that DC schemes face more challenges – but the positives that come from better member understanding and engagement have been key features within the LGPS and a lead that others could follow,” he added.
Phelim Bolger, head of client services for the UK and Ireland at IFM Investors, said there was “a real opportunity” to help members understand “how long-term capital supports the essential infrastructure people rely on every day”.
“Pension capital is already backing critical infrastructure across the UK and, with the Mansion House Accord targeting a 5% allocation to UK private markets, the industry has a timely opportunity to work together to demonstrate that impact more clearly. Doing so can help build greater understanding, confidence and trust in the pensions system.”
Nest acquired a stake in IFM last year, becoming the asset manager’s first UK owner, alongside a number of Australian superannuation funds.
