What makes the Impact Plan different to the Fossil Fuel Free Plan?

Clare Reilly

by , Chief Engagement Officer

at PensionBee

24 Jan 2023 /  

Planet earth behind buildings windmill and flowers

Our Impact and Fossil Fuel Free plans are both types of responsible pension plans. They’ve been created to enable savers like you to use your pension to invest in building a better world.

Customer feedback continually shapes how we do things here at PensionBee and we’ve heard from some customers who wanted a plan with a more proactive approach to addressing the world’s great social and environmental needs while saving for a happy retirement. So, the Impact Plan was created in collaboration with you, our customers, and designed for PensionBee by money manager BlackRock to help build the kind of world you’d like to retire into.

Since we announced the Impact Plan, we’ve seen great interest from our customers, many of whom have already committed to switching. However, we’ve also heard from some who’ve asked us what makes the Impact Plan different to our Fossil Fuel Free Plan.

There are many differences between the two but we wanted to highlight how the Impact Plan and Fossil Fuel Free Plan differ in their key features. Below you’ll find a table which provides a quick comparison. We hope it’ll help you see if switching to the Impact Plan’s right for you.

Impact Plan Fossil Fuel Free Plan
Investment manager BlackRock Legal & General
Annual management
fee
0.95% 0.75%
Objective Inclusion-focused with stringent exclusions

Targets long-term total returns by only investing in companies whose core products and services are deemed to be addressing some of the world’s major social and environmental challenges and advancing the UN Sustainable Development Goals (UN SDGs) and targets.
Exclusion-focused

Replicates the performance of the FTSE TPI Global (ex Fossil Fuel) index. The index excludes companies with activities in relation to fossil fuels, tobacco and/or certain companies that don’t comply with UN Global Compact (UNGC) screening criteria.
Investment
style
Actively managed Passive index tracking
Type of
investing
Impact investing Climate-aligned index
Asset allocation 100% equities 100% equities
Number of holdings 200-300 1,475
Return profile Objective is to deliver long-term total returns of 0-2% versus MSCI ACWI index Objective is to track the performance of the FTSE TPI Global (ex Fossil Fuel) index to within +/ 0.60% p.a. for two years out of three
Measurable impact Yes No
Considers
social
factors
Yes No
Company alignment with UN Sustainable Development Goals Yes No
Exclusions
UNGC violators Yes Yes
MSCI orange
flag controversies
Yes No
MSCI red flag controversies Yes No
MSCI CCC ESG scores Yes No
Tobacco Yes Yes
Fossil fuels Yes Yes
Civilian firearms Yes No
Controversial weapons Yes Yes

Inclusion criteria

In addition to the above, our Impact and Fossil Fuel Free plans also differ in the criteria each uses to determine which companies your pension will invest in.

Impact Plan

The Impact Plan follows a rigorous five-step vetting process:

  • Alignment with impact theme

    • People

      • Affordable housing
      • Education and skilling
      • Financial and digital inclusion
      • Public health
      • Safety and security
    • Planet

      • Efficiency, electrification and digitisation
      • Green energy
      • Pollution remediation and prevention
      • Sustainable food, water and waste
  • Identification of a UN SDG target that the company’s product or service advances.
  • Materiality measure to check more than 50% of revenue’s aligned to the impact theme or UN SDG.
  • Additionality check to ensure the company is an agent of change or tackling an issue unaddressed by other actors
  • Measureability of impact using best practice metrics such as IMP’s Five Dimensions of Impact and GIIN’s IRIS+ Core Metrics

Fossil Fuel Free Plan

Switching to the Impact Plan

The Impact Plan’s a great opportunity to use your pension for impact investing, which is typically closed to mainstream pension savers. Our newest Impact Plan enables you to save for a happy retirement whilst investing in the kind of world you’d like to retire into.

Many of our customers, like you, have already started to switch to the Impact Plan. You can make the switch too by simply logging in to your BeeHive and following the banner on the home screen to get started.

Switch to the Impact Plan

Risk warning

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. This information should not be regarded as financial advice.

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