Mind the gap: younger DC members care about the planet, their pension funds should take note
Natalie Waller, an independent trustee joins forces with HS Trustees MD Bobby Riddaway urging DC Schemes not to ignore inter-generational risk
Today, we manage pensions for members living very different lives, different ages, different time horizons, different priorities. Yet too often, we rarely ask them: "What do you want from your money?"
Younger members are already telling us. Over 80% of under-40s in the UK care about climate change. They want their savings to deliver purpose, impact, and value not just financial return and they want to be able to retire into a liveable world, not have to adapt just to survive in a damaged one.
It is not either/or- it is both and it is urgent.
The intergenerational gap is real and widening. If we continue to invest ignoring the hopes and values of younger members, we risk losing not just engagement, but trust. We risk managing assets that will fail to support a sustainable, resilient future for those who will live with the consequences of today's decisions.
Yet many members still find themselves invested by default, not by choice, but because they lack the technical expertise, confidence, or support to make active investment decisions.
Default funds need to evolve, moving beyond purely financial objectives to strategies that align with members' values, deliver measurable real-world impact, and help secure a sustainable future. Today’s defaults too often lag behind what members actually want and what the future economy demands and requires.
If we want to stay relevant and truly engage our members, we must mind the gap and close it. Our economy needs this funding as well.
That starts by listening: surveying members to understand what motivates them and what they expect from their pension savings.
According to Aon’s 2024 DC Pension Scheme Survey, only 18% of DC schemes have ESG-screened funds in their default option. This is not enough.
System change is needed: not just better communications, but a fundamental shift in how we assess and value investment offerings. Products must be evaluated not only on financial metrics, but also on their ability to support the sustainable transition, manage systemic risks, and deliver better real-world outcomes. for members today and for generations to come.
If the pensions industry is to avoid the growing financial risks linked to sustainability challenges, it must participate fully in the transition and capture the investment opportunities it creates. This can make a real difference on environmental and social issues affecting our members’ futures.
Engaging members now will build trust, agency and ownership whilst helping to align investments with their purpose and values. Ultimately, it will drive better outcomes for members, for the economy, and for the planet.
This is why we urge DC funds to mind the intergenerational gap on climate risk and close it- before it becomes a chasm.
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