You might’ve seen our newest plan, the Impact Plan, which launched in February 2023. But if you’re unsure about what this new plan is, and want to find out more about impact investing, then you’re in the right place.
We believe the PensionBee Impact Plan, created with the world’s largest money manager, BlackRock, to be the most ambitious attempt in the UK market to direct mainstream pension savings into companies actively working to solve the world’s greatest social and environmental problems while helping you save for retirement.
Here’s why our Impact Plan’s different to other pension plans on the market:
Aligned to an impact investing framework
The Impact Plan invests in companies intending to generate positive, measurable social and environmental impact alongside a financial return. The Global Impact Investing Network (GINN) provides a helpful framework that explains the core characteristics of impact investing. It’s these essential features that our Impact Plan was built around, including
- The intention to contribute to a social or environmental benefit
- Measuring and reporting on performance
- Communicating performance information to support other impact investments.
In order to be considered for inclusion in our Impact Plan, companies are required to demonstrate that they’re helping to create real change by meeting this strict set of criteria laid out in the GINN framework.
Action, not just words
To meet one of the core characteristics - intentionality - a company must show that more than 50% of its revenue or business activity is and must continue, contributing to a social or environmental benefit or, align with one of the United Nations Sustainable Development Goals (UNSDGs).
We’re dedicated to making sure the companies involved in our Impact Plan are ‘walking the walk’ and not just ‘talking the talk’.
Advancing, not just aligning
The Impact Plan emphasises the importance of helping people and global issues that require greater attention. So the companies involved must show that they’re helping to solve issues that other organisations, such as governments, charities and other businesses aren’t. It could be that those issues are going completely unaddressed or are just in need of more attention.
Take Bank Rakyat Indonesia (BRI), for example, which provides micro-banking services across Indonesia. It enables people such as farmers and fishermen to access microfinance solutions, helping them invest in the equipment they need to run businesses and earn an income. Without BRI, many small businesses and individuals may otherwise have no access to the financial services that help them provide for themselves, their families and their local communities. In addition to its social impact, Bank Rakyat has also demonstrated strong financial performance within its industry with its most recent annual report for 2021* showing an increase in net profit of more than 75% over the financial year at the bank.
The Impact Plan also invests in companies helping to alleviate social and environmental needs wherever they may be found, whether in emerging or developed parts of the world.
Sustainable energy company, EDP Renewables, the world’s fourth largest producer of renewable energy, focuses not just on renewable power generation but other key areas such as energy storage. With a commitment to the UN’s 2030 agenda, the company’s activities seek positive environmental and social benefits. For instance, beyond developing renewable solutions it adopts an entire environmental management life cycle to ensure it uses sustainable practices, including the materials it sources and the construction and installation of its facilities, on the environment and local communities throughout the world. Whilst its Access to Energy (A2E) strategy seeks to provide clean energy to developing countries, at a fundamental level, EDP Renewables’s growing as a business. The first nine months of 2022 saw an increase in net profit of 181% and continued positive growth, increasing its international presence to 28 different international markets, both compared to 2021.
The crucial element in advancing, not just aligning with an impact framework, is that those needs would not yet be addressed without the support and investment from the Impact Plan.
Diversified impact investing opportunity
At their core, pension plans are about saving for retirement and we’re passionate about helping our customers do just that. The Impact Plan aims to generate long-term financial returns on your investment whilst also aiming to positively impact the world.
All investments carry a degree of risk. However, having a broad diversification of companies in a plan helps spread that risk across lots of different companies. The Impact Plan includes a diversified portfolio of 200-300 companies, whose market value is more than $1 billion, to help reduce risk. We’re committed to building long-term partnerships, so the companies are held in the portfolio for around three to five years at a time.
A cost-effective pension plan
Plans that are actively managed typically carry higher fees as you’re paying money managers to make ongoing decisions about how to invest your money, rather than following an index of stocks. The advantage of this approach for the Impact Plan is the management expertise of a dedicated impact investment team which ensures the plan only invests in companies that meet its strict inclusion criteria. The Impact Plan’s actively managed in two ways. First, companies are selected based on whether they meet the plan’s criteria and, second, they’re monitored to ensure they continue to meet those criteria or exclude them if they don’t.
By creating a diversified and long-term portfolio, which reduces transaction costs, we’re able to offer an impact investing option to customers, whilst maintaining a management fee of 0.95% (with 50% off for the portion of your savings over £100,000).
Designed and managed by impact investment experts
BlackRock manages our Tailored Plan, our most popular plan, as well as our new Impact Plan fund. It’s uniquely placed to create a portfolio optimised for impact investment thanks to its in-house specialists.
The team’s led by Eric Rice, an Impact Investing Pioneer and a Co-Portfolio Manager of the Impact Plan who architected the world’s first diversified public markets strategy in 2019. It was Eric’s work that helped to open impact investing up to the general public and make it accessible to investors of all types, including pension savers.
We’re proud to bring impact investing to the forefront of our offering of pension plans and believe this is a big milestone in working towards a better future for people and the planet. Whilst the concept’s been around for some time, and uptake continues to grow, it’s estimated that impact investing accounts for less than 1% of all Assets Under Management (AUM) in the UK, as of 2020. Our Impact Plan offers a unique opportunity to use your pension to invest in helping to create a better world, whilst saving for a happy retirement.
Find out more about the Impact Plan and how you can switch or sign up today.
As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. Anything discussed on the podcast should not be regarded as financial advice.