It’s not news that we’re in the middle of a climate crisis. But did you know it could have an impact on your pension too? Far from being only an environmental problem, it could actually affect the pensions of millions of us who have money tied up in pension pots.
Up until now, coal, oil and gas have remained solid investment options for pension providers. Now, with many governments across the world scrambling to up their investment in green energy - solar energy, biofuels and wind farms for example - the theory is that renewables will continue to attract growing levels of investment from major schemes.
So what does this mean for you? Is having a pension invested into green energy the way to go to get the best out of your money?
This guide will explore what you need to know about ethical investing and the pros and cons of having a pension invested into green energy.
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Some pension schemes allow you to have a say in where your money is invested. We’re seeing a growing trend of ethical investment where people put their money where their morals are and invest only in companies that do good for the community or the planet.
Moving funds away from high investment in fossil fuels and towards renewable, green energy sources is one example of more responsible investing on an industry-wide scale.
While ethical investment is no doubt good for the health of the planet, there’s some evidence to suggest that it’s good for your pension pot too. Speaking at an Association of British Insurers’ (ABI) conference in 2019, then Pensions Minister Guy Opperman said:
“The financial risks from climate change are too important to ignore... Pension schemes can identify investment opportunities which will make market-beating returns for members as we move to a low-carbon economy.”
But according to research by ShareAction, there’s still a lot of work to do in this area. The vast majority of the largest UK pension schemes are falling short on climate change duties.
So if investing in green energy or more ethical sources is important to you, you might want to consider taking your pension investments into your own hands.
There are different types of pension - state pensions, workplace pensions and personal pensions. When it comes to your state and workplace pensions, you’ll likely have very little say over where your pension fund is invested. That decision is left to pension providers.
One place where you can control where your investments go is personal pensions, specifically self-invested personal pensions (SIPPs). These put a lot of investment power back into your hands. With a SIPP, you can choose where your pension funds are invested - including green energy schemes like solar panels, biofuels and wind farms if you choose.
While investing in green energy might seem like a no-brainer in some respects, it’s important to be aware that it doesn’t come without its risks. Let’s weigh up the pros and cons of having your pension invested into green energy.
Green energy pension investments aren’t for everyone. With the high level of risk associated with investing in green energy schemes, they’re generally only suitable for:
So if you think you may have been mis-sold a pension product involving green energy investments or the risks weren’t properly explained to you, seek professional advice. You may be able to make a claim for compensation if you were a victim of pension mis-selling.
Your pension is no different from any other long-term saving or investment. Before you make any choices about your pension, it’s worth speaking to an independent financial advisor to help you choose an investment option suitable for your financial goals and ethical beliefs.
The world of investment is littered with new markets which emerged as a great concept but took some time to bed down. Some might argue that investment in green energy is a prime example of this scenario. As a consequence this begs the question, is an early-stage investment in green energy appropriate for a pension fund? Is it sufficiently liquid? Does it carry undue risk?
No. If we assume that you took advice from your financial adviser then in the event this was an inappropriate investment, they may still be deemed negligent and open themselves up to compensation claims. It would be different if you invested in green energy on an execution only basis, i.e. you took responsibility, but if it was suggested by your adviser, this is a whole different scenario.
Unless you are deemed an expert in investment (and pension fund investment in particular) your pension fund investments should be monitored by a regulated pension advisor. Unfortunately, we have seen many scenarios in years gone by where fraudsters and scammers have disappeared often with millions of pounds of pension fund investment. In this scenario, it is difficult, if not impossible, to track down those responsible for the fraud/scam.
Therefore when seeking the compensation, you may need to take a step back and look at who advised you to consider green technology investments in the first place - in particular those which turned out to be fraudulent/scams.
So, if your financial adviser was the one who suggested a particular green technology investment, which turned out to be inappropriate, then you may be able to pursue them for compensation.
Pension investment and pension administration are complicated at the best of times. When you have to gather evidence of at best an inappropriate investment, at worst a scam/fraud, it is essential that you collate as much paperwork as possible.
All investments, whether pension fund or outside of your pension fund, should have a paper trail that includes advice sought, advice given and the terms under which investments were carried out. Therefore, many people prefer to employ the services of a claims management company to assist with collating evidence, reviewing the case and hopefully pursuing compensation.
When you have collated as much evidence as possible to support your claim, it is time to approach a claims management company for a review of your case. They will give an independent assessment of your chances of success, and if deemed a minimum 60%, they will likely apply to take on your case. The majority of cases for financial damages are pursued on a “no win no fee” arrangement.
This effectively removes the claimant’s liability to cover costs incurred by the claims management company in pursuing the case. However, in exchange, they will look to negotiate what is known as a “success fee”.
The first thing to remember is that with a “no win no fee” arrangement, claims management companies will only be remunerated if your case is successful. The “success fee” is an arrangement whereby your claims management company will receive a share of any compensation awarded.
In effect, this is their payment/reward for a successful claim and tends to be in the region of 25% of the compensation received. This figure can vary from case to case, company to company, but it shouldn’t be too far from this ballpark figure.
Here at Money Savings Advice, we have partnered with some of the UK’s leading Financial Claims management companies. They have already helped thousands of people claim compensation for a mis-sold pension and they can do the same for you.
Choosing an independent claims management company means they won’t proceed with a claim unless they are sure it is in your best interests. They are also regulated by the FCA, which gives you an additional layer of protection.
If you would like to speak to one of these claim management companies who can help you make a compensation claim, then click on the below and answer the very simple questions.
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