UK-based PensionBee, an online pensions provider, is reportedly planning to introduce a fossil-fuel-free investment option for its customers. The new investment plan may be suitable for clients who would prefer to exclude coal, oil, gas, tobacco, and arms manufacturers from their investment portfolios.
PensionBee’s latest investment option might be supported by Legal & General Investment Management. It’s different from the company’s other sustainable and ESG (Environmental, Social, Corporate Governance) plans. The new option completely leaves out businesses such as oil giant Shell which need to do more to improve their overall impact on the environment.
PensionBee’s management noted:
“The Fossil Fuel Free plan is one of the UK’s first mainstream private pensions to completely exclude companies with proven or probable reserves in oil, gas or coal, tobacco companies, manufacturers of controversial weapons, nuclear weapons and persistent violators of the UN Global Compact.”
PensionBee is now requesting its customers to commit a total of £100 million from their pension portfolios so that the company can provide the plan at a competitive yearly fee of 0.75%.
A PensionBee representative has revealed that the fund already has more than £24 million in total commitments.
The company confirmed:
“To meet the fund requirements for launch we need a collective commitment of £100m from existing PensionBee customers. £100m is the fund ‘seed’ amount; the minimum amount needed to launch a new product like this.”
PensionBee said that after the fundraising target has been reached, it will begin offering the plan to its customers.
Fossil Fuel Free might not be suitable for all customers. That’s because the plan allocates 100% of investments to equities, which would make it the company’s highest risk portfolio (if and when it becomes available).
But pensions are considered long-term investments and PensionBee argues that if investors really believe that we’re about to transition to a greener economy, then it may be a lot riskier to actually have investments in coal, oil or gas companies.
Digital banks and Fintech firms are beginning to add support for various online pension schemes.
Starling Bank, a top UK based digital bank, recently added Penfold to its Marketplace. Starling’s Marketplace integrates optional third-party solutions to Starling’s users. Penfold is a pension service that enables self-employed individuals to set up and manage a pension.
Penfold has been designed for freelancers, self-employed people, and limited company directors, whose incomes can sometimes fluctuate significantly from one month to the next.