Auto Enrolment Pensions

Issue 162 

Last updated: July 2016 



How ethical are 'auto enrolment' pensions?


In February 2016, ShareAction published an ethical ranking of the biggest providers of ‘auto enrolment’ pensions in the UK. This is an extract from that report.

New regulations in the UK mean that all employers not already providing pensions will need to put their staff into a pension scheme and contribute towards it. This is called auto enrolment, and by 2018 an estimated nine million workers – mainly within small- to medium-sized businesses – will be saving into such pension schemes.

Life insurance companies and pension funds are one of the largest investor groups in the UK, with a staggering £3 trillion in assets under management according to the Bank of England. The nine providers covered in this survey represent a huge portion of this sector as they have over £1.9 trillion in total assets under management.

The Organisation for Economic Co-operation and Development (OECD) estimates that UK pension funds invest 27.7% of their assets abroad, meaning their investment behaviour has global consequences. As large shareholders, these pension providers have significant power to influence the behaviour of companies in the UK and across the globe. 


ShareAction's ethical ranking of pension providers:


Table: Pension Provider


This is ShareAction’s first survey of auto enrolment providers and it looked at ethical performance across eleven areas to reach its score:

  • Governance
  • Transparency and accountability
  • Climate change
  • Human rights
  • Labour rights
  • Nature
  • Remuneration
  • Taxes and corruption
  • Extractive industries
  • Power generation
  • Arms


The survey found that communications and accountability to members still fall way short of what is needed to overcome the public’s widespread lack of trust and understanding of the pension sector, and to ensure their valid ethical concerns are reflected in investment policy and practice.

None of the providers include information about Responsible Investment issues in the annual statement sent to members. Only one provider surveys the members of its auto enrolment default fund about Responsible Investment. 

Only Standard Life names all the companies they engage with, alongside a summary of the topics they engage with companies on. Only NEST publishes a list of their largest investment holdings.


Climate change

Institutional investors have a vital role to play in ensuring global warming remains below the 2˚C target agreed by global leaders in Paris.

All the providers except for The People’s Pension mention climate change in their investment policies, but there is much room for improvement on this issue.

Only Aviva has committed to measure and disclose the greenhouse gas emissions of its entire investment portfolio.

Only Aviva, Aegon and Legal & General state that they invest in companies or projects that support the transition to a low-carbon economy and emissions reduction in the economy as a whole.

Only Aviva, Standard Life and Scottish Widows assess the risks of ‘stranded assets’ with respect to fossil fuel companies’ project portfolios.[1]

However, as six of the providers have recently signed the Paris Pledge for Action, committing them to support implementation of the Paris agreement, it is hoped that rapid improvements will be seen.


This article was compiled using data from ShareAction’s report ‘Reclaiming Ownership: A survey of governance and responsible investment at UK automatic-enrolment pension providers’.

The full report is downloadable from the ShareAction website and there is also a web tool that enables savers to explore and compare the performance of the pension provider which manages their savings.





Product Guide

Image: Pensions

Ethical Shopping Guide to Pensions

Ethical and environmental ratings for 11 ethical pension providers. 

Read More



Product Guide

Image: Cash ISA

Ethical Shopping Guide to ISAs

Ethical and environmental ratings for 44 ISAs. We explain what ISAs are and what ethical options are available. 

Read More




Ethical made easy

Detailed ethical ratings for over 40,000 companies, brands and products, plus Ethical Consumer magazine.

30 day trial subscription - find out more


1 The stranded assets concept, developed by Carbon Tracker, posits that in order to limit global warming to 2˚C above pre-industrial levels (the target agreed by global leaders in the 2010 Cancun agreement), 80% of known fossil fuel reserves must remain in the ground. This means that 60-80% of the oil, coal and gas reserves of listed firms are unburnable under a 2˚C scenario and could become worthless, stranded assets.