Law Commission – ‘Pension Funds and Social Investment’: call for evidence


Please respond asap if you have experience of DC pension schemes and wish to support my response to the consultation paper above.


The Law Commission is asking a number of pensions related questions that relate to what their paper refers to as ‘social investment’ – which includes what I would call ‘SRI or ethical investment’.

The deadline for responding to their consultation is 15 December 2016.

The responses they receive will be used to help compile a report that will be published in May 2017.

 This reports may well impact the future success of SRI and ethical options in the DC pensions market.

I plan to respond to this consultation with the aim of helping to support further growth in this area but would welcome your help in doing so.  (ps yes, I am also speaking with UKSIF)



My view of this consultation paper is that (as with previous FCA consultations) ‘social’ investment (ie investment which may have specialist product structures and a significant bias towards impact related outcomes) is being confused with the broader area of ‘sustainable, responsible and ethical investment (SRI)’ fund market where such options are already being used within DC pension products/schemes and structures.

This confusion leads to unnecessary confusion relating to liquidity, price etc – which in turn is likely to worry Trustees and others unnecessarily (with diverse possible knock on effects).

With regard to choice – a very quick search on (simply selecting ‘Pensions’ as your Product filter option) shows that there are in over 130 DC Pension fund options.

Many of these are of course duplicate offerings of ‘primary’ funds – however the point remains: there are many different DC pension options, available via different distributors. What’s more – these different options usefully target both diverse ‘ethical’ and ‘financial’ aims and objectives. (These numbers are in addition to ‘Lifestyle’ options incidentally – as Fund EcoMarket only lists single entries where in fact 10-20 target dates may exist.)

Experience tells me that these have been chosen both as default and satellite funds for DC pension schemes by many over many years, through different regulatory regimes, indicating that these are often viewed as appropriate both in terms of performance and price.

My current situation, given the structure of Fund EcoMarket (ie ‘ethical’ and fund identification information only), means that I do not however hold up to date information on pricing or performance.

I will focus my response to this consultation on the questions where I can add value given my experience – but would greatly welcome help with the following five questions …

a. What ethical/SRI DC funds are available for .75bps or less?

b. How often are these offered by DC schemes (and what is the take up)?

c. How often are they selected as default funds?

d. Up to date brief information on performance of popular SRI ethical DC options

e. Evidence that (if) such options increases member take up   

(I would also welcome comments regarding ‘labelling’ – see below)

What next?

The L C paper is available here, the full link to the review is also shown below.

  • Please respond directly to the Law Commission if you wish.
  • Alternatively – if send your comments, suggestions or data particularly regarding my five questions below to so that I can include them in my response. I am happy to either list or hide sources – as appropriate.


 For your information:

A link to the paper, a full set of LC questions and my contact details follow:


Question 1

What are the barriers to pension funds investing:?

(a) In infrastructure generally?

(b) In socially significant infrastructure?

(c) In other forms of social investments?


Question 2

Do any of those barriers relate to issues of law and regulation?


Question 3

Is the size of funds a major issue? If so, are there legal obstacles to scheme mergers?


Question 4

We wish to hear from employers and pension providers about the ethical options currently on offer (whether positively or negatively screened).

(a) What ethical DC pension funds are available?

(b) What proportion of people take them up?

(c) What sort of returns do they provide?


Question 5

We seek views about how far these options meet the needs of savers.

(a) Would a greater range of options encourage greater engagement with pension saving?

(b) In particular, would options seeking social impact as well as financial returns encourage engagement?


Question 6

We are also interested to hear about the returns available for social investment (intended to have a positive benefit):

(a) Are there sufficient investment opportunities to provide both social impact and market returns?

(b) How far should savers be prevented or discouraged from sacrificing returns for social impact?


Question 7

In practical terms, how can financial advisers:

(a) best explore their clients’ social motivations?

(b) present social investment options in a way that is clear, fair and not misleading?


Question 9

Should social investment options be labelled or described in a standardised way? Would this be possible given the range of funds which might be regarded by different groups, or in different contexts, as social investment?


Question 10

Is there a need to review the legal framework around social enterprises, to make it easier for such enterprises to borrow money and receive investment?




Julia Dreblow


and – the free to use SRI and ethical investment fund search hub and information tool

Please reply to if you prefer

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