Responsible investment workplace pension funds – some employers offer them !
Workplace pension funds are set up by an employer for their employees. They are an important part of Canada’s retirement income system. Along with public pension programs – Old Age Security (OAS) and the Canada/Quebec Pension Plan (C/QPP) – and registered retirement savings plans (RRSP), they assist Canadians to maintain a standard of living after retirement comparable to the one they had before retiring.
Usually, both the employee and the employer contribute to the plan. To learn more about workplace pension and savings plan basics, see GetSmartAboutMoney.ca.
By adopting responsible investment policies — or environmental, social and governance (ESG) policies — pension funds can help to influence companies to improve their green and ethical behaviour. It is increasingly recognized that environmental and social issues can have a significant bearing on the long-term success of companies in which pension funds invest, and consequently on funds’ ability to pay promised benefits. Companies’ inadequate environmental management, lack of attention to human rights issues or poor corporate governance are not only ethical concerns, but can also impact long-term returns.
According to the 2014 Canadian Responsible Investment Trends Report, the Canadian pension fund mandates managed under responsible investment guidelines grew by $288.57 billion from 2012 to 2014. The principle responsible investment strategy pension investors used was the engagement strategy. This strategy was used in managing more than 93% of Canadian responsible pension assets surveyed. The top three engagement issues were executive compensation, human rights and greenhouse gas emissions.  We do not know what portion of these assets are held in workplace pension plans.
The Ontario government recently introduced legislation in an amendment to the Ontario Pension Benefits Act, requiring pension plan administrators to establish a statement of investment policies and procedures that “include[s] information as to whether environmental, social and governance factors are incorporated into the plan’s investment policies and procedures and, if so, how those factors are incorporated.”
As a member of a pension scheme, whether as a contributor or as a beneficiary, you have the right to question the scheme’s trustees about the decisions they make on your behalf. You can encourage better investment selection by your pension fund and help ensure that the fund’s decisions more accurately reflect the interests of its membership – to whom it is ultimately accountable. Applying pressure on your province to follow Ontario’s example could also help.
We have indentified a couple of country-specific guides on actions individuals can take to get a responsible investment pension plan at their workplace:
If we could fund the creation of a guide for Canadian workplace pension fund members, we’d be more than happy to create this tool for you. Let us know if you would like us to develope such a tool by leaving a message in the comment box below, or on our Facebook page.
You can also read about a group of community organisations and women’s groups that created a group workplace pension plan that aligns, as much as currently possible, with their values and vision.