Maybe it won't last very long or maybe it is still a distant memory: your retirement! And yet, in all cases, there is no harm in taking a critical look at your pension. The sooner the better! Do you know where you build up your pension through your employer? And where this is invested in? Even as a self-employed person, you can make sustainable choices when it comes to your pension. We dove into the world of pensions. Because building up a sustainable pension is definitely possible!
What is a sustainable pension?
First of all, what exactly is a sustainable pension? A more sustainable pension means that a pension fund takes into account ESG criteria. These letters stand for Environmental, Social and Governance. The criteria are used to check whether a company operates sustainably and ethically. And takes account of people, the environment and society. In the case of a pension fund, it means that it invests in companies and projects that contribute to a better, greener world. Think of fair working conditions, clean energy and good governance.
The Fair Pension Guide
As in the banking world, there are also enduring top players in the pension world. And thus also some less fanatical players. Because while every pension fund has recently been increasingly presenting itself as a good investment for a sustainable, green future, it turns out this is not entirely true. Some pension funds, despite the fine words, still invest in the gambling, tobacco or arms industries. Or in companies where they do not take labour and human rights very seriously. And what about child labour or the fossil industry? So it all turns out not to be so rosy. Want to be sure what your pension fund is investing in? Then take a look at the Fair Pension Guide. Here is a list of the ten largest pension funds (based on data from 2022), but of course your (smaller) pension fund may not be listed here. What then?
Criticism
Great, such a tool that gives more insight. The website of the Fair Money Guide - of which the Fair Pension Guide is part - is super clear and accessible. The only problem is that there is also criticism from financial institutions about the chosen research methodology. What should you do with that as a simple employee or self-employed person? Our conclusion is that it is still a good platform to gain more insight into exactly what financial institutions, such as pension funds, do and how they differentiate themselves from each other, even if the results would be a little less black and white than the website states.
Taking action helps
As an employee of an organisation, you might not think you can have much influence on your pension fund, but you certainly can. After protests by several civil society organisations, such as Fossil Free NL, Greenpeace and Friends of the Earth, and concerned employees, the major pension funds ABP and Zorg en Welzijn (PFZW) chose to cut their investments in the polluting fossil industry. A milestone! And so this can also be done at smaller pension funds. So you yourself can approach your pension fund with questions about what your pension is actually invested in. And whether this could not be done in a different, more sustainable way. It can help to do this together with a group of colleagues; together you are stronger than alone.
It's not the most fun task: figuring out your pension. And yet it is important to see how you are doing and what your money is invested in. Then you can hopefully enjoy it extra hard later.
Building a sustainable pension as a freelancer
If you are a freelancer, you don't have an employer to take care of your pension for you. That means you have to take action yourself if you want to go financially secure for later. An interesting way to do this is through pension investing or pension saving. The amount you put in can be deducted from your income which means you pay less tax now. You have several banks and financial institutions offering it, such as Brand New Day popular among self-employed people. And there again, you can choose more sustainable green funds.
Independent investing for a sustainable future
Finally, you can also enter the stock market independently. Through your investments, you can, for instance, invest in a wind farm or microcredit for start-ups in Kenya. Before you start investing, though, it is important that you study the risks well. After all, a company you have invested in may go bankrupt. And then you (often) lose your money. The general rule for investing is: the greater the risks, the higher the return (the yield). So taking risks can pay off, but never invest with money you can't afford to lose.
Contribute to a better future with a sustainable pension
By choosing a sustainable pension, you are not only thinking about your own financial future but also that of the earth. And by building up your pension, you are already contributing to sustainable investments and solutions. Hopefully this article has helped you to take a closer look at your pension. Or just start building your own sustainable pension pot. Good luck!
More sustainable tips from thegreenlist.nl
- You can also contribute to a better world by choosing a health insurer: read here what to look out for when switching to green health insurance.
- While you're at your computer or phone: Have you cleaned up your digital photo and video archives yet?
- Good for the earth and your wallet: You can save energy in your home with these tips and trics.
Photo credits: main image: Vlada Karpovich & Anna Shvets (Pexels). Other: T Leish (Pexels), Cottonbro (Pexels).
