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More than 90% of DC savers are in default options, as engagement with pensions is generally poor. There is currently no requirement on DC pension schemes to include sustainability criteria in their default funds, although they have to report publicly on their approach.
Instead, the government is now opting to put the onus on individuals to 'green' investments. Commissioned as part of the government’s COP26 agenda, the 'green nudge’ trial will examine if behavioural nudges and messages on increasing saver engagement with the sustainability of pension investments work, and how this could translate into greener pension decision-making.
“These trials will give us vital insight into how interventions can boost saver engagement and encourage greener choices. I look forward to seeing the results,” he added.
Emma Douglas, director of workplace savings & retirement at Aviva, said increasing engagement with pension saving was a top priority for the provider and its clients. “Of equal importance is educating savers about the role their pension scheme investments can have in achieving net zero ambitions, and this trial will do that too. It is a real win-win opportunity for providers, consumers and ultimately, climate change,” she said.
Fiona Smith, investment proposition manager at Smart Pension, said Smart recently spoke to the EU parliament on how to use nudges, adding: “We are delighted to be working the DWP and our peers to expand this knowledge across the industry.”
Is a 'green nudge' the best way to make DC saving move to sustainable options?