Ethical pension plan...is it possible?

[ska invita]

Even the most ethical plans seem to invest in property development shenanigans (pension pots are a big driver in our housing bubble imo), landlordism and shares in other corporate behemoths.

What kind of alternative options are there?

Did a search on this and ethical consumer said the governments Nest Ethical scored the best, but that still looks like utter shite to me.

 

[Pickman's model]

don't know, my pensions with my (former and present) employers. don't imagine my present employers' pension scheme is unethical in the slightest but not so sure about my former employer's scheme.

 

[ska invita]

It needn't be a pension plan exactly... Somewhere ethical to put savings even. Credit Union?

I remember reading the coops ethical investment policy years ago and in the small print it said there aren't enough really ethical investment opportunities in existence so the bank will also invest in some companies it rather wouldn't.... And this makes me think that maybe its impossible to avoid

 

[mauvais]

Ultimately a pension is simply you looking for growth from capital, so if you hold doggedly anti-capitalistic beliefs, you're probably going to find issue.

You could invest it yourself via a SIPP or ISA, but you'll have a hard time avoiding the usual amateur traps, let alone managing diversification etc.

 

[Fez909]

I think the only ethical pension plan is to do it independently: ie save or invest in things which you will be able to sell on when you're old. I think the odds of ending up old and skint are high with that plan, though.

 

[Monkeygrinder's Organ]

Well 'ethical' is a bit too subjective to say yes or no really. I had one at my old work where you had to fill in preferences in terms of what matters to you which seems like a fairly good approach. So alcohol producers was something on the list that I had no particular problems with, whereas I ticked no arms manufacturers. It's with Norwich Union now I think although it might have been someone else at the time iirc (it's going to be worth about £20 a year when I retire so I don't pay too much attention).

 

[Treacle Toes]

Well 'ethical' is a bit too subjective to say yes or no really. I had one at my old work where you had to fill in preferences in terms of what matters to you which seems like a fairly good approach. .

Yeah, this is as much choice as we get too.

 

[ska invita]

Well 'ethical' is a bit too subjective to say yes or no really. I had one at my old work where you had to fill in preferences in terms of what matters to you which seems like a fairly good approach. So alcohol producers was something on the list that I had no particular problems with, whereas I ticked no arms manufacturers. It's with Norwich Union now I think although it might have been someone else at the time iirc (it's going to be worth about £20 a year when I retire so I don't pay too much attention).

NEST Ethical is no arms manufacturers, no animal testing, no mining etc, but it is property juggling and landlordism and it is other blue chips https://www.nestpensions.org.uk/sch...es/public/docs/NEST-ethical-fund-brochure.pdf


What about Credit Unions?

 

[kabbes]

Ultimately a pension is simply you looking for growth from capital, so if you hold doggedly anti-capitalistic beliefs, you're probably going to find issue.

This bears repeating, frankly.

The OP is trying to achieve the impossible. Investment is capitalism. You take some capital and you use that to achieve a return that has been generated by other people. Whatever form it takes, that's the nuts and bolts.

 

[bi0boy]

What about Credit Unions?

Credit Unions lend money to people at higher interest rates than banks and then send bailiffs around if they don't pay it back.

 

[Treacle Toes]

Credit Unions lend money to people at higher interest rates than banks and then send bailiffs around if they don't pay it back.

 

[Piers Gibbon]

I started an ethical pension plan back in 1998 or something, which I thought made me a far sighted sober sensible set-for-life kind of guy. But just like many unethical pension plans it seems to be worth sod all now.

 

[mauvais]

This bears repeating, frankly.

The OP is trying to achieve the impossible. Investment is capitalism. You take some capital and you use that to achieve a return that has been generated by other people. Whatever form it takes, that's the nuts and bolts.

Whilst this is the inescapable truth, in fairness to the OP, you can choose to some extent between different forms and levels of capitalist bastardry, and we don't know that the OP is a communist zealot or just someone who doesn't want to invest in death rays.

It's still Hobson's choice though, and I challenge anyone to quantitatively define which is worse in its net effect, BAE Systems or General Motors (to say nothing of Volkswagen).

The other way of looking at it is this, and I don't pretend it isn't compromised: you have more control over your spending than you do your income. Generally, you can choose whether to shop ethically more easily than you can choose whether to do an ethical job, and that's the best you can do within the confines you're presented with. And, to a fair extent, the more capital you have, the more influence you can wield. So instead of making absolute ethical investment the be-all-and-end-all, take a pragmatic approach to it that you're comfortable with, and then be more careful how you use the returns.

 

[ska invita]

This bears repeating, frankly.

The OP is trying to achieve the impossible. Investment is capitalism. You take some capital and you use that to achieve a return that has been generated by other people. Whatever form it takes, that's the nuts and bolts.

Well yeah, and that's why the thread title asks, is it possible. I'd be happy with a savings account that kept up with the rate of inflation, but even giving it to banks is not ideal.

In the quick bit of reading I've done I think I heard mention of investment pots that, say, only invest in renewable energy... But I can't find anything like that in practice

 

[ska invita]

I started an ethical pension plan back in 1998 or something, which I thought made me a far sighted sober sensible set-for-life kind of guy. But just like many unethical pension plans it seems to be worth sod all now.

This is the other thing - I trust the stock market none - I want nothing to do with it, and wouldnt bet a penny on it - no matter how diversified the pension plans are I dont trust them

 

[mauvais]

I started an ethical pension plan back in 1998 or something, which I thought made me a far sighted sober sensible set-for-life kind of guy. But just like many unethical pension plans it seems to be worth sod all now.

I got to choose how to divide my funds for one of my pensions. I chose to put some of it in the 'ethical' pot. The results are interesting.

That's compared against a fund that ought to reflect generalised global growth. Overall I think it's significantly outpaced any other option. But then in shorter snapshots, it's also been more volatile and taken more damage in the downturns.

I have no idea what definition of 'ethical' it fits.

The other option that did quite well was the Shariah fund.

 

[mauvais]

This is the other thing - I trust the stock market none - I want nothing to do with it, and wouldnt bet a penny on it - no matter how diversified the pension plans are I dont trust them

This is folly and you can't get away from it. In the timeframe of pensions, which encompasses multiple booms and busts, if you keep your money as cash, inflation will fuck you irrecoverably. If you invest in the market, directly or otherwise, crashes will fuck you, but less.

 

[ska invita]

This is folly and you can't get away from it. In the timeframe of pensions, which encompasses multiple booms and busts, if you keep your money as cash, inflation will fuck you irrecoverably. If you invest in the market, directly or otherwise, crashes will fuck you, but less.

well as you know I think we're on the edge of the abyss, so Id rather not right now...

Shariah sounds interesting wiki says:
Investment restrictions[edit]
Riba[edit]
Main article: Riba
The payment or receipt of interests are considered usury and unjust.[1] Debt is also disapproved making investments in highly leveraged companies unacceptable. Funds cannot pay fixed or guaranteed return on capital. Instead of borrowing and lending, Islamic finance relies on sharing the ownership of the assets and therefore risk and profit/loss.[1]

Haram[edit]
Companies involved in prohibited business activities cannot be part of a Shariah fund strategy. Prohibited business activities can relate to food (production and sales of alcoholic beverages including pubs and restaurants, pork products, tobacco), gambling (casinos, on-line gambling, betting, lottery schemes), adult oriented (video, magazines, on-line material, strip clubs), dubious, immoral and illicit trades (prostitution, drugs).

Maisir[edit]
Islam forbids gambling in any form. With help of Bahrain-based International Islamic Financial Market and New York-based International Swaps and Derivatives Association, global standards for Islamic derivatives were set in 2010. One main objective in Islamic derivatives is to avoid "excessive" risk. The “Hedging Master Agreement” provides a structure under which institutions can trade derivatives such as profit-rate and currency swaps.[3][4]

Day trading[edit]
Day trading is considered akin to maisir.[citation needed] Marketable securities generally have a multi-day settlement period, during which time the underlying instruments, while cleared, are not formally registered in the name of the purchaser. As day traders do not wait for settlement to complete, they are using a type of credit cushion provided by their broker.[5]Some day traders also rely on a margin account to finance their trading activities.


I expect NEST Ethical is more ethical than that though

 

[mauvais]

well as you know I think we're on the edge of the abyss, so Id rather not right now...

How old are you? If you're, say, 40, then it doesn't matter that much unless you think the wheels are going to come off capitalism and money altogether. If you lose half your pot in a repeat of The Great Depression tomorrow, then as well as the fact that many things are relative and everyone sinks together, by the time you retire, it will be near-irrelevant in the long term trend. Especially compared to inaction, i.e. cash. I'm not saying that today is a great time to pour all your money into the FTSE100 or anything, but in the long term most downturns are averaged out.

Then again, the luxury of time is a factor, and if you're 64, you should be in cash or bonds

 

[kabbes]

Well yeah, and that's why the thread title asks, is it possible.

And yeah, that's what I'm trying to answer. No, it is not possible if you have a fundamental problem with capitalism as a concept. Because that's what investment is.

It is possible if you have a more pragmatic view of what ethical means, however. But that depends on the way in which you are compromising. Do you have a problem with corporations per se? With certain types of corporation? With certain industries? With the concept of shares? With the concept of loans? Define what ethical means for you and the rest will follow.

I'd be happy with a savings account that kept up with the rate of inflation, but even giving it to banks is not ideal.

Well, even keeping up with inflation requires somebody to invest that money. But that aside -- please note that keeping up with inflation earns you precisely nil in real terms. It just means that your pot now is worth what it will always be worth. Could you afford to retire on that pot now, if you were 65? If not then it needs to grow, not stay the same.

In the quick bit of reading I've done I think I heard mention of investment pots that, say, only invest in renewable energy... But I can't find anything like that in practice

Oh yes, there are all kinds of "ethical investment funds". It's a massive industry in its own right. But their version of ethical doesn't necessary match up to yours, so I think you first need to make sure you know exactly what it is you do and don't want to include.

 

[ska invita]

Oh yes, there are all kinds of "ethical investment funds". It's a massive industry in its own right. But their version of ethical doesn't necessary match up to yours, so I think you first need to make sure you know exactly what it is you do and don't want to include.

just found this
World’s first renewable energy pension fund launched in the UK

Investments that build a better world - Abundance sounds interesting in general...will read later

 

[newbie]

I tried this. Decided on the Friends Provident Stewardship. FP = mutual, so definite ethics plus points there, and originally founded by Quakers, who I've developed some respect for although I've no interest in their religion.

Stewardship claimed to seek to invest in companies which "make a positive contribution to society and avoid those which harm the world and its people". I don't have much argument with that as a sentiment.

Since then FP has demutualised, then been bought by a tax dodging gambler and merged with BUPA insurance & Axa and then flogged to Aviva. I have little idea what the current investment policy has become.

You may be able to guess the moral I take from this story.

 

[ska invita]

Responsible Investment | Friends Life

Looks similiar to the NEST Ethical

 

[marty21]

I started an ethical pension plan back in 1998 or something, which I thought made me a far sighted sober sensible set-for-life kind of guy. But just like many unethical pension plans it seems to be worth sod all now.

I started a private pension in 2002 , it was sorted out via an ethical Financial Advisor but I don't actually know what they invest in tbh . The public sector pension I pay into , again , no idea what stuff they invest in.

 

[newbie]

Responsible Investment | Friends Life

Looks similiar to the NEST Ethical

yeah, fine words.


Trouble is money you put into a pension fund is likely to be sitting there for a long, long time.

I'm freelance, some years good others bad, I've never had the confidence to make regular payments. On another good year I bought into National Provident Institution, another Quaker originated mutual with an ethical pension offering. Bad timing, recession followed, so the value collapsed just as it transpired there were huge exit fees, then NPI was bought and sold by billionaires.

More recently I went for a SIPP and have tried to find funds that don't profit from war or famine, preferring utilities and technology and so on, but I've given up kidding myself it's ethical, it's just a way of saving for retirement.

 

[mauvais]

yeah, fine words.


Trouble is money you put into a pension fund is likely to be sitting there for a long, long time.

I believe transferring has become significantly easier of late, but I haven't done it.

 

[newbie]

I started a private pension in 2002 , it was sorted out via an ethical Financial Advisor but I don't actually know what they invest in tbh . The public sector pension I pay into , again , no idea what stuff they invest in.

Oh yes, I'd forgotten. the NPI one mentioned above came through an ethical pensions advisor. A decade or more later i discovered he was still taking a commission, year after year. I don't remember the details but I put a stop to it i think.

 

[newbie]

I believe transferring has become significantly easier of late, but I haven't done it.

Seems plausible, an old statement showed a 5% difference between fund value and transfer value, current statement shows no difference.

 

[Sprocket.]

I always think the term ethical investment is an oxymoron personally.
I wondered many times whether public sector pension plans invest in Serco, G4S and the like.
We are all desperate to provide for our old age but having a conscience about where your money is invested is a minefield, no pun intended.
I hoped to retire at 60, nah, going to be at least 65 due to the amount of poor returns from both work and private schemes.
Savings are not making anywhere near the effort of saving, so do you pay the mortgage off quicker before the rates go up? Then you are hit with penalties for early settlement!

Sadly I see most of the younger lads I work with buying property and using the income off that to buy more property. You can buy to rent property around here for just over £75k and due to the east European workers there is a ready market for property investors. It is tragic that private landlords are making such a huge comeback because pensions are so abysmal.

 

[newbie]

It is tragic that private landlords are making such a huge comeback because pensions are so abysmal.

Leaving aside any questions about ethical saving, this is pure government policy.

In 2008 the economy collapsed because people had overborrowed on worth-less assets. The response of the government was to lower interest rates, and keep them low ever since. which has the deliberate effect of encouraging borrowing and discouraging saving.

So savers have been subsidising borrowers. Or to put it another way, tenants saving to get a deposit for a mortgage are not only subsidising their landlord directly through their rent, they're doing it through interest rate manipulation as well.

Of course the unscrupulous have become landlords.