February 19, 2025 • 18 mins
Have you ever wondered what happens to some of the money you save in your pension? Beyond securing your financial future, your pension could be helping to build better communities, fund affordable housing and invest in innovative health technologies.
In this episode, our host Iona Bain sits down with Legal & General’s Pete Gladwell to explore how pension funds can be used for social investments, while still delivering strong financial returns.
Learn how your pension savings contribute to projects that shape towns and local communities and how you can make more informed investment choices.
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Iona and her guests share their own personal thoughts and opinions in this podcast. These might be different from Legal & General’s take on things. They give financial guidance for a UK audience that’s relevant at the time of recording. It’s general best practice, not the kind of personalised advice you’d get from a financial adviser.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Iona Bain (00:02):
Hello, I am Iona Bain, and welcome to another episode
of A Little Bit Richer. Today we're going to find
out what happens to the money you invest into your
pension. Where does this money get invested so that it
grows for your retirement? And how is some of that
money being used for a greater benefit, not just for
us, but our community too? From regeneration projects with the
local council, youth health technologies, and affordable housing, there are
(00:25):
many tangible ways our pension money can be used to
help build better and healthier communities for generations to come.
Here with me to discuss all this is Pete Gladwell,
who oversees social impact investment decisions at Legal & General. Now,
as part of his role, he works with local councils,
government, universities, and their advisors to decide where money saved
(00:46):
into people's pensions can be used for wider benefit. Welcome, Pete.
Pete Gladwell (00:52):
Thanks, good to be here.
Iona Bain (00:53):
So let's start with the basics. What happens to the
money that I put into my pension?
Pete Gladwell (00:59):
Well, typically what happens is that money is brought together
with millions of other people's pensions and it's invested into
funds. And that can be very simply invested into buying
shares in the biggest companies in the UK, the FTSE 100,
so the 100 biggest companies in the UK. Or it
could be invested in lending to the government, government bonds.
Or it could be invested into things that are a
(01:22):
bit more beneficial to society, and I think that's one of the
things we're going to talk about today.
Iona Bain (01:26):
Okay. So my pension money is being invested in all
sorts of stuff, including stuff that is out there in
the world doing positive things. And that's where social impact
investing comes in.
Pete Gladwell (01:37):
Yes.
Iona Bain (01:37):
Break that down for me. What does that mean?
Pete Gladwell (01:39):
So I think first and foremost, we've got to remember
that pensions need to be a source of financial security.
So social impact investment isn't about giving your money away
to good causes. It's not a charitable thing, but it
is recognising that your pension can be a source of
financial empowerment for you, but it can also empower other
people. It can change people's lives for better. It can
(02:01):
change towns, cities, even drive whole countries' economies to greater
success. And so-
Iona Bain (02:07):
Because it's such a massive amount of money that we're
talking about here.
Pete Gladwell (02:11):
Exactly. You're talking about tens of billions of pounds. And
when your pension is brought together with everyone else's pensions,
that can be a real force for good in society.
As I say, it's also about making a really strong
financial return, but it's trying to get that flow of
money going back to improve people's lives as well.
Iona Bain (02:26):
Sounds fantastic, but how does this actually work in real
life? Hit me with some examples, Pete. What can you
bring to the table that shows that this actually can work?
Pete Gladwell (02:36):
So this isn't just something that Legal & General does. It's
really important to say it's something that lots of pension
providers and managers are trying to do more of. But
at L& G it's something we're really passionate about. So
even 11 years ago, we invested in 4, 000 affordable
homes, and that provides safe, secure, affordable housing for people,
obviously improving their quality of life. But it also provides
(02:57):
really strong stable income that we can use to pay
people's pensions and provide that financial security for people. Then
you've got big city centre regeneration schemes, where there can
be whole areas of towns or cities that haven't had
the investment they need for decades in many cases. We're
looking at how we can reinvest people's pensions and savings
back into those places to create economic growth, but also
(03:20):
meet the needs for that city in this decade, which
will be very different to what they were 20, 30, 40 years ago.
Iona Bain (03:26):
So how do you assess what projects to take on,
and how do you pull together the partnerships to make
these happen?
Pete Gladwell (03:34):
That's the kind of secret sauce, that's the difficult bit.
Because you can't really do it just sat in an
office in the city in London and think somehow I'm
going to know what needs to be invested into in
Sunderland, so yeah.
Iona Bain (03:44):
Yeah. I can imagine that a lot of people have to be involved in that decision- making process.
Pete Gladwell (03:49):
Yeah, absolutely. So that's why it's really important to spend
a lot of time engaged with local communities, local authorities
in particular often, really good guides as to what the
place needs. They will have understood what could really drive
local economic growth. What's the need? Is it affordable housing?
Is it housing for rent or is it housing for
key workers? Often people like a local authority or a combined
(04:09):
authority will have a good picture of that. And then,
as you say, it's about creating the right partnerships that
enable pensions to be invested to meet that need locally.
Iona Bain (04:18):
Can we just dig a little bit more into what
that looks like, who else you might be partnering up
with to make these kind of projects happen?
Pete Gladwell (04:26):
That really depends on the need locally and once we've
worked with community groups or local authority or combined authority
to understand the need. Sometimes it will be a local
developer. For example, Cardiff is a city where Legal & General,
for example, has invested hundreds of millions of pounds in
a partnership with a local developer. But sometimes it will
(04:48):
be working with local businesses. For example, we own a
lot at the centre of Poole and we've been working
very closely with local businesses there. We've been providing them
with space so that they can grow and really bring
vibrancy to that high street. It's just really important to
stress that makes it a more attractive financial investment for
us because we've got more people in that high street.
It's more vibrant. We're working with the local NHS trust
(05:10):
to provide better primary healthcare there, but it also meets
the needs of the local community and is working with those
partnerships. And so, those are L& G examples. As I
say, other investors and providers will have other examples, but
it's that working with the right type of partners to
meet that need to create the social impact that we
want to have.
Iona Bain (05:28):
How do you help the community have that sense of
ownership and not feel that something is being imposed on
them without their say so?
Pete Gladwell (05:37):
First and foremost, I've got to say I'm a big
believer in local democracy, so we will very purposefully and
intentionally engage with local leaders and politicians. But it's really
important to understand the breadth of lived experience and views
within different communities. And so, that can be anything from
going out knocking on doors to going and doing exhibitions
(05:58):
in kind of the local hole, or even using a
lot of tech. Now we can use tech platforms to
engage in different languages so that when local people are
browsing a social media platform, they have the opportunity to
engage with what we're thinking about the local regeneration scheme.
And again, we're trying to make sure that it's not
just about any kind of tokenism.
Iona Bain (06:18):
Yeah, I can imagine there is a big difference between
just ticking that box and saying, " Yep, we had an
event in the community and that's it, job done." But
actually getting people to buy into it and feel excited
about it and feel like they want it in their
area, that is the true measure of success.
Pete Gladwell (06:33):
Yeah.
Iona Bain (06:34):
That's good to know. So you've spoken about how this
isn't charity, this isn't just doing nice things for the
community. This is about also bringing in an income for
pension scheme members. How do you ensure that these are
actually solid investments for people's pensions?
Pete Gladwell (06:51):
That's the fundamental point of the job, is to cross
those double hurdles. But it's tempting to think of the
two as competing and as to think, " Well, we are
either doing as much good as we can or we're
choosing to make us a long- term financial return." And
actually, if you find the right projects to meet that
need, to be the investor in that project, you can
(07:12):
see both achieved. So for example, I mentioned affordable homes
earlier. That can be a really exciting investment for someone
who's looking for a long- term stable income, because we
know that there will be a long- term enduring need
for affordable housing in many regions around the country. Now
that's great if you want a long- term stable income.
But actually on the other hand, let's say you're looking
(07:34):
for shorter- term returns. We do a lot of work
with universities, for example, and they have some really exciting
startups that might be new health technology companies. So you're
investing in a company. It's probably going to mean in the next
few years whether you find out whether it's a real
success or not. It's the same principle where you're identifying
that company could meet a real need in society. That
health tech company is doing something really innovative that could
(07:57):
improve thousands if not millions of people's lives. So we're
going to invest pensions and savings in that health tech company.
It's higher risk, it's shorter term, it's a different type
of return from investing in affordable housing, but it can
generate a really powerful social impact. Does that make sense?
Iona Bain (08:11):
That makes total sense.
Pete Gladwell (08:11):
Yeah.
Iona Bain (08:11):
And actually, it's really interesting that this isn't just about
solid worthy projects. It's also actually about anticipating what we
will all need in the future.
Pete Gladwell (08:21):
Yeah. It comes out of a partnership we have with a university; then
we can really understand the exciting technology that's coming out
that could benefit society and start to invest in those
startups again. So it is about getting away from the
desk and building those partnerships to understand the social need better.
Iona Bain (08:36):
So how do you track and monitor the progress and
the impact of these investments? What targets do you have
for these kinds of projects?
Pete Gladwell (08:45):
What we try to work through is a really clear
theory of change, we call it. So how is this
investment going to make a difference in society or in
someone's life or in a place?
Iona Bain (08:54):
And this is known as theory of change.
Pete Gladwell (08:56):
Yes. How does the money translate to the impact and
the outcomes, often social but sometimes environmental outcomes, that we
want our investment to deliver. Just to pick an example
of one we've done, when we worked with Newcastle City
Council and University, we invested tens of millions of pounds
in the centre of Newcastle to create this really exciting
startup space for spin- outs coming out of the university.
(09:18):
And it's a whole ecosystem there. But we worked with
them really closely to understand what would success look like
if we invested tens of millions of pounds into that
project? What difference would it make to Newcastle? Off the top of my head,
I can remember 30, 000 tonnes of CO₂ saved was one
of the specific outcomes that we identified we wanted to
try and drive through that investment. There'll be jobs, there'll
(09:39):
be economic growth, there might be new research, impact on
health inequalities. You can see the impact specifically that your
investment is having in places.
Iona Bain (09:48):
Something topical at the moment is how do we solve
the problem of growth? How do we get our economy
growing? Do you think that this could be part of that
solution? Because pension funds have been spoken about as potentially
helping in terms of investing in infrastructure and driving growth
in the future. What do you reckon?
Pete Gladwell (10:05):
Absolutely. I couldn't agree more. And it starts with a
fundamental premise that is why I'm very excited to be
on this podcast, which is this is people's pensions and
savings. It's so easy for us as society to drift into, "
That's the private sector, and this is the public sector.
And it's the public sector job to do good, and
the private sector job to make as much money as
(10:25):
possible." And this whole industry, the pensions industry, is actually
about the public's pensions and savings being invested into things
that drive economic growth and improve places. Now, infrastructure is
a fascinating example of something that actually can generate a
really stable long- term return. People will continue to use
a train line or a doctor surgery. People's pensions and
(10:48):
savings could be deployed to help drive that growth. Housing,
key worker housing, the NHS is in huge need of
investment as well. So for me, a lot of this
comes with having that shared mission, being clear on what
we're trying to drive as a country, and then finding
the right types of investment to meet that need. Sometimes
it will be taxpayer money, sometimes it will be people's pensions
and savings.
Iona Bain (11:08):
So when I'm automatically enrolled into a workplace pension, where
does my money go?
Pete Gladwell (11:14):
So typically, your pension provider will put you in something
called a default fund. And the whole aim of that
is to provide something that is a good solution for the
majority of people. That tends to be where your money
starts. And then, you can look more deeply into, " Well,
what is that actually being invested into? Is that stocks?
Is it shares? Is it corporate bonds? Is it property?
(11:36):
And if it's stocks and shares, what kind of companies
is my pension being invested into?" And then, that gives
you the opportunity to consider if it's aligned with your
values and if it's the kind of things you'd like
your pension to be invested into.
Iona Bain (11:48):
But that default is required to meet a standard that
will work for everyone. Right?
Pete Gladwell (11:53):
Yeah, it's often a pretty good starting place, pretty good
solution. It's definitely great to have your money invested in
a pension fund.
Iona Bain (11:59):
Better than nothing.
Pete Gladwell (12:00):
Yeah, much better than nothing. I think the point of
this discussion is thinking about the impact your pension can
have. So often you can enhance the impact of your
pension by considering other options. There's costs to be considered
if you move your pension from the default to something
else. So it's worth carefully considering that decision and certainly
not doing it all the time. But the default's been
(12:22):
designed to be a great starting place for the majority of people.
Iona Bain (12:24):
So how do people actually find out information about what
their pension is invested in? Because I can imagine people
might feel a bit daunted at that task and think, "
Well, where do I go?" Where is this information?
Pete Gladwell (12:36):
So you should be able to go on your pension
provider's website or an app and log in there, and
you can then look and see what mandate you've given
them. Have you told them to invest in all of
the companies in the FTSE 100? That may be the default
setting. Have you asked them to invest in an ethical
fund or commercial real estate, for example? So you can
(12:57):
dive in, and typically you can look at the funds
and the fund fact sheets and get an idea of
what your pension is actually being invested into.
Iona Bain (13:04):
So it's the fund fact sheet that we should look
out for that's going to give us some of that
helpful info that we are looking for.
Pete Gladwell (13:10):
Yeah. Yeah. Yeah. And then as well, you may find that there's
a service called Chimelo, which gives people the opportunity to
get more details on when your fund money is invested
into it. So some providers will provide you with that option
as well. And so, you're using that combination of things
to work out where your pension is currently going. And
then, you can think about, " Well, does that align with
my personal values of the companies I'm seeing on this
(13:31):
fund fact sheet, companies that I want my money to
be invested into?"
Iona Bain (13:35):
But shifting your money around isn't cost- free, I assume.
Pete Gladwell (13:38):
So it's not something to be done lightly. You may
need to take some advice on whether that's the right
decision for you. But the first step is just getting
informed. Where is your money being invested? And then thinking, "
Am I happy with this?" And then, as you say,
it's something to consider whether you want to move funds
within that platform, if there's any cost to be incurred
by doing that. And you don't want to be moving
your money around every day or every week.
Iona Bain (13:59):
No, no.
Pete Gladwell (13:59):
Not at all.
Iona Bain (13:59):
And I imagine that a lot of pension providers now
are trying to make that default fund, i. e., the
one that most of us will just be automatically put
into, they're trying to make those default funds more socially
responsible. Is that process ongoing?
Pete Gladwell (14:15):
I think the industry generally is becoming more cognisant of
the impact that it has. But again, you've got the
power to change the industry. Where people put their pensions
is what the industry then moves to accommodate. So if
you have lots of people telling their providers, " I don't
want to be invested in these sectors, and I really
care about these things," then providers like Legal & General and
(14:37):
others will start to create funds for you to invest
in those. So even within your choice, you can affect
what the industry does in future and affect that trend
in the industry towards being more considerate of the environmental
and social impact of the billions of pounds of money that
we steward.
Iona Bain (14:53):
Brilliant. So finally, Pete, what are your three top tips
for anyone who wants to learn more about social impact investing?
Pete Gladwell (15:00):
Yeah. Well, the first one, we've covered it but I
can't stress it enough. Your pension does have a power.
It can have real impact. It is worth thinking about
who you're entrusting your pension pot to. Because when it's
combined with millions of other people's pensions, it starts to
be a game- changing, a town- changing, a city- changing,
a country- changing amount of money.
Iona Bain (15:19):
Oh, I like that. That's great.
Pete Gladwell (15:21):
It's true. I think the second one is identifying the
need for investment in society. So making sure that whoever
it is who's stewarding your pension, they're thinking about the
needs for investment in places, but also what the right
type of investment is to meet that need. So we
discussed this earlier, but just to try and put some
meat on the bones, it's about making sure that if
you're looking for a long- term stable investment, you might
(15:44):
be thinking about lending money to the government. That's very long-
term, very secure, where you could also be investing in
affordable housing. If you're thinking about something short- term, then
you might be investing in health and tech startups. Those
are just two examples, but it's about meeting the social
need with the right type of money. And I can't
advise people on what the right type of manager is
or the right type of fund for them. That's why
(16:04):
you've got pensions advisors. But it's that understanding of what's
beneficial for society, but also your own stage in life.
Iona Bain (16:11):
Mm- hmm. Because we've spoken about the fact that it
doesn't have to be one or the other. It can
actually be a win- win if you get it right.
Pete Gladwell (16:17):
Exactly. And actually, my personal thesis is you could potentially get
enhanced financial returns if you're investing in things society really
needs. And that's where it gets really exciting. And then
lastly, we talked a bit about this, but making sure
your pension aligns with your own beliefs. That could be
religious beliefs, it could be personal beliefs. So looking at
what your pension is actually invested into at the moment,
(16:39):
is that aligned with your own beliefs? And then thinking
if it isn't, about how you can move it to
something that is more aligned. As I said, at the
time you need to think about the charges you might
incur, but it's still worth considering. Get advice if you
need to. But that's a really good way to make
sure that your money, including your pension, is empowering the
right types of companies, the right type of investments, and not
(17:00):
ones that you fundamentally personally disagree with.
Iona Bain (17:03):
Great. Okay. So I can summarize those tips as understand
the power that your pension has. Get informed about whether
your pension is indeed doing social impact investing. We've talked
about what you think that should look like today.
Pete Gladwell (17:15):
Yeah.
Iona Bain (17:16):
And thirdly, make sure that whatever you are investing in
is aligned with your own values. And if you're not
happy, then speak up and make that change.
Pete Gladwell (17:32):
Yeah.
Iona Bain (17:32):
Have I got that right?
Pete Gladwell (17:32):
Perfect.
Iona Bain (17:32):
Oh, good.
Pete Gladwell (17:32):
Thank you.
Iona Bain (17:32):
Excellent. All right.
Pete Gladwell (17:32):
My job here is done.
Iona Bain (17:32):
Thanks very much, Pete. So interesting to hear about all the
ways that our pension money is being used for good out there
in the world. We're going to come back to the
topic of pensions, including the big debate, property versus pensions.
But in the meantime, I'd love it if you could
follow the podcast, leave us a review, and help others
get a little bit richer too. You can keep up
with the show on TikTok, Instagram, and YouTube. Follow us
(17:56):
at Legal & General. Thanks for listening. Until next time, see
you soon.
Hello, I am Iona Bain, and welcome to another episode
of A Little Bit Richer. Today we're going to find
out what happens to the money you invest into your
pension. Where does this money get invested so that it
grows for your retirement? And how is some of that
money being used for a greater benefit, not just for
us, but our community too? From regeneration projects with the
local council, youth health technologies, and affordable housing, there are
(00:25):
many tangible ways our pension money can be used to
help build better and healthier communities for generations to come.
Here with me to discuss all this is Pete Gladwell,
who oversees social impact investment decisions at Legal & General. Now,
as part of his role, he works with local councils,
government, universities, and their advisors to decide where money saved
(00:46):
into people's pensions can be used for wider benefit. Welcome, Pete.
Pete Gladwell (00:52):
Thanks, good to be here.
Iona Bain (00:53):
So let's start with the basics. What happens to the
money that I put into my pension?
Pete Gladwell (00:59):
Well, typically what happens is that money is brought together
with millions of other people's pensions and it's invested into
funds. And that can be very simply invested into buying
shares in the biggest companies in the UK, the FTSE 100,
so the 100 biggest companies in the UK. Or it
could be invested in lending to the government, government bonds.
Or it could be invested into things that are a
(01:22):
bit more beneficial to society, and I think that's one of the
things we're going to talk about today.
Iona Bain (01:26):
Okay. So my pension money is being invested in all
sorts of stuff, including stuff that is out there in
the world doing positive things. And that's where social impact
investing comes in.
Pete Gladwell (01:37):
Yes.
Iona Bain (01:37):
Break that down for me. What does that mean?
Pete Gladwell (01:39):
So I think first and foremost, we've got to remember
that pensions need to be a source of financial security.
So social impact investment isn't about giving your money away
to good causes. It's not a charitable thing, but it
is recognising that your pension can be a source of
financial empowerment for you, but it can also empower other
people. It can change people's lives for better. It can
(02:01):
change towns, cities, even drive whole countries' economies to greater
success. And so-
Iona Bain (02:07):
Because it's such a massive amount of money that we're
talking about here.
Pete Gladwell (02:11):
Exactly. You're talking about tens of billions of pounds. And
when your pension is brought together with everyone else's pensions,
that can be a real force for good in society.
As I say, it's also about making a really strong
financial return, but it's trying to get that flow of
money going back to improve people's lives as well.
Iona Bain (02:26):
Sounds fantastic, but how does this actually work in real
life? Hit me with some examples, Pete. What can you
bring to the table that shows that this actually can work?
Pete Gladwell (02:36):
So this isn't just something that Legal & General does. It's
really important to say it's something that lots of pension
providers and managers are trying to do more of. But
at L& G it's something we're really passionate about. So
even 11 years ago, we invested in 4, 000 affordable
homes, and that provides safe, secure, affordable housing for people,
obviously improving their quality of life. But it also provides
(02:57):
really strong stable income that we can use to pay
people's pensions and provide that financial security for people. Then
you've got big city centre regeneration schemes, where there can
be whole areas of towns or cities that haven't had
the investment they need for decades in many cases. We're
looking at how we can reinvest people's pensions and savings
back into those places to create economic growth, but also
(03:20):
meet the needs for that city in this decade, which
will be very different to what they were 20, 30, 40 years ago.
Iona Bain (03:26):
So how do you assess what projects to take on,
and how do you pull together the partnerships to make
these happen?
Pete Gladwell (03:34):
That's the kind of secret sauce, that's the difficult bit.
Because you can't really do it just sat in an
office in the city in London and think somehow I'm
going to know what needs to be invested into in
Sunderland, so yeah.
Iona Bain (03:44):
Yeah. I can imagine that a lot of people have to be involved in that decision- making process.
Pete Gladwell (03:49):
Yeah, absolutely. So that's why it's really important to spend
a lot of time engaged with local communities, local authorities
in particular often, really good guides as to what the
place needs. They will have understood what could really drive
local economic growth. What's the need? Is it affordable housing?
Is it housing for rent or is it housing for
key workers? Often people like a local authority or a combined
(04:09):
authority will have a good picture of that. And then,
as you say, it's about creating the right partnerships that
enable pensions to be invested to meet that need locally.
Iona Bain (04:18):
Can we just dig a little bit more into what
that looks like, who else you might be partnering up
with to make these kind of projects happen?
Pete Gladwell (04:26):
That really depends on the need locally and once we've
worked with community groups or local authority or combined authority
to understand the need. Sometimes it will be a local
developer. For example, Cardiff is a city where Legal & General,
for example, has invested hundreds of millions of pounds in
a partnership with a local developer. But sometimes it will
(04:48):
be working with local businesses. For example, we own a
lot at the centre of Poole and we've been working
very closely with local businesses there. We've been providing them
with space so that they can grow and really bring
vibrancy to that high street. It's just really important to
stress that makes it a more attractive financial investment for
us because we've got more people in that high street.
It's more vibrant. We're working with the local NHS trust
(05:10):
to provide better primary healthcare there, but it also meets
the needs of the local community and is working with those
partnerships. And so, those are L& G examples. As I
say, other investors and providers will have other examples, but
it's that working with the right type of partners to
meet that need to create the social impact that we
want to have.
Iona Bain (05:28):
How do you help the community have that sense of
ownership and not feel that something is being imposed on
them without their say so?
Pete Gladwell (05:37):
First and foremost, I've got to say I'm a big
believer in local democracy, so we will very purposefully and
intentionally engage with local leaders and politicians. But it's really
important to understand the breadth of lived experience and views
within different communities. And so, that can be anything from
going out knocking on doors to going and doing exhibitions
(05:58):
in kind of the local hole, or even using a
lot of tech. Now we can use tech platforms to
engage in different languages so that when local people are
browsing a social media platform, they have the opportunity to
engage with what we're thinking about the local regeneration scheme.
And again, we're trying to make sure that it's not
just about any kind of tokenism.
Iona Bain (06:18):
Yeah, I can imagine there is a big difference between
just ticking that box and saying, " Yep, we had an
event in the community and that's it, job done." But
actually getting people to buy into it and feel excited
about it and feel like they want it in their
area, that is the true measure of success.
Pete Gladwell (06:33):
Yeah.
Iona Bain (06:34):
That's good to know. So you've spoken about how this
isn't charity, this isn't just doing nice things for the
community. This is about also bringing in an income for
pension scheme members. How do you ensure that these are
actually solid investments for people's pensions?
Pete Gladwell (06:51):
That's the fundamental point of the job, is to cross
those double hurdles. But it's tempting to think of the
two as competing and as to think, " Well, we are
either doing as much good as we can or we're
choosing to make us a long- term financial return." And
actually, if you find the right projects to meet that
need, to be the investor in that project, you can
(07:12):
see both achieved. So for example, I mentioned affordable homes
earlier. That can be a really exciting investment for someone
who's looking for a long- term stable income, because we
know that there will be a long- term enduring need
for affordable housing in many regions around the country. Now
that's great if you want a long- term stable income.
But actually on the other hand, let's say you're looking
(07:34):
for shorter- term returns. We do a lot of work
with universities, for example, and they have some really exciting
startups that might be new health technology companies. So you're
investing in a company. It's probably going to mean in the next
few years whether you find out whether it's a real
success or not. It's the same principle where you're identifying
that company could meet a real need in society. That
health tech company is doing something really innovative that could
(07:57):
improve thousands if not millions of people's lives. So we're
going to invest pensions and savings in that health tech company.
It's higher risk, it's shorter term, it's a different type
of return from investing in affordable housing, but it can
generate a really powerful social impact. Does that make sense?
Iona Bain (08:11):
That makes total sense.
Pete Gladwell (08:11):
Yeah.
Iona Bain (08:11):
And actually, it's really interesting that this isn't just about
solid worthy projects. It's also actually about anticipating what we
will all need in the future.
Pete Gladwell (08:21):
Yeah. It comes out of a partnership we have with a university; then
we can really understand the exciting technology that's coming out
that could benefit society and start to invest in those
startups again. So it is about getting away from the
desk and building those partnerships to understand the social need better.
Iona Bain (08:36):
So how do you track and monitor the progress and
the impact of these investments? What targets do you have
for these kinds of projects?
Pete Gladwell (08:45):
What we try to work through is a really clear
theory of change, we call it. So how is this
investment going to make a difference in society or in
someone's life or in a place?
Iona Bain (08:54):
And this is known as theory of change.
Pete Gladwell (08:56):
Yes. How does the money translate to the impact and
the outcomes, often social but sometimes environmental outcomes, that we
want our investment to deliver. Just to pick an example
of one we've done, when we worked with Newcastle City
Council and University, we invested tens of millions of pounds
in the centre of Newcastle to create this really exciting
startup space for spin- outs coming out of the university.
(09:18):
And it's a whole ecosystem there. But we worked with
them really closely to understand what would success look like
if we invested tens of millions of pounds into that
project? What difference would it make to Newcastle? Off the top of my head,
I can remember 30, 000 tonnes of CO₂ saved was one
of the specific outcomes that we identified we wanted to
try and drive through that investment. There'll be jobs, there'll
(09:39):
be economic growth, there might be new research, impact on
health inequalities. You can see the impact specifically that your
investment is having in places.
Iona Bain (09:48):
Something topical at the moment is how do we solve
the problem of growth? How do we get our economy
growing? Do you think that this could be part of that
solution? Because pension funds have been spoken about as potentially
helping in terms of investing in infrastructure and driving growth
in the future. What do you reckon?
Pete Gladwell (10:05):
Absolutely. I couldn't agree more. And it starts with a
fundamental premise that is why I'm very excited to be
on this podcast, which is this is people's pensions and
savings. It's so easy for us as society to drift into, "
That's the private sector, and this is the public sector.
And it's the public sector job to do good, and
the private sector job to make as much money as
(10:25):
possible." And this whole industry, the pensions industry, is actually
about the public's pensions and savings being invested into things
that drive economic growth and improve places. Now, infrastructure is
a fascinating example of something that actually can generate a
really stable long- term return. People will continue to use
a train line or a doctor surgery. People's pensions and
(10:48):
savings could be deployed to help drive that growth. Housing,
key worker housing, the NHS is in huge need of
investment as well. So for me, a lot of this
comes with having that shared mission, being clear on what
we're trying to drive as a country, and then finding
the right types of investment to meet that need. Sometimes
it will be taxpayer money, sometimes it will be people's pensions
and savings.
Iona Bain (11:08):
So when I'm automatically enrolled into a workplace pension, where
does my money go?
Pete Gladwell (11:14):
So typically, your pension provider will put you in something
called a default fund. And the whole aim of that
is to provide something that is a good solution for the
majority of people. That tends to be where your money
starts. And then, you can look more deeply into, " Well,
what is that actually being invested into? Is that stocks?
Is it shares? Is it corporate bonds? Is it property?
(11:36):
And if it's stocks and shares, what kind of companies
is my pension being invested into?" And then, that gives
you the opportunity to consider if it's aligned with your
values and if it's the kind of things you'd like
your pension to be invested into.
Iona Bain (11:48):
But that default is required to meet a standard that
will work for everyone. Right?
Pete Gladwell (11:53):
Yeah, it's often a pretty good starting place, pretty good
solution. It's definitely great to have your money invested in
a pension fund.
Iona Bain (11:59):
Better than nothing.
Pete Gladwell (12:00):
Yeah, much better than nothing. I think the point of
this discussion is thinking about the impact your pension can
have. So often you can enhance the impact of your
pension by considering other options. There's costs to be considered
if you move your pension from the default to something
else. So it's worth carefully considering that decision and certainly
not doing it all the time. But the default's been
(12:22):
designed to be a great starting place for the majority of people.
Iona Bain (12:24):
So how do people actually find out information about what
their pension is invested in? Because I can imagine people
might feel a bit daunted at that task and think, "
Well, where do I go?" Where is this information?
Pete Gladwell (12:36):
So you should be able to go on your pension
provider's website or an app and log in there, and
you can then look and see what mandate you've given
them. Have you told them to invest in all of
the companies in the FTSE 100? That may be the default
setting. Have you asked them to invest in an ethical
fund or commercial real estate, for example? So you can
(12:57):
dive in, and typically you can look at the funds
and the fund fact sheets and get an idea of
what your pension is actually being invested into.
Iona Bain (13:04):
So it's the fund fact sheet that we should look
out for that's going to give us some of that
helpful info that we are looking for.
Pete Gladwell (13:10):
Yeah. Yeah. Yeah. And then as well, you may find that there's
a service called Chimelo, which gives people the opportunity to
get more details on when your fund money is invested
into it. So some providers will provide you with that option
as well. And so, you're using that combination of things
to work out where your pension is currently going. And
then, you can think about, " Well, does that align with
my personal values of the companies I'm seeing on this
(13:31):
fund fact sheet, companies that I want my money to
be invested into?"
Iona Bain (13:35):
But shifting your money around isn't cost- free, I assume.
Pete Gladwell (13:38):
So it's not something to be done lightly. You may
need to take some advice on whether that's the right
decision for you. But the first step is just getting
informed. Where is your money being invested? And then thinking, "
Am I happy with this?" And then, as you say,
it's something to consider whether you want to move funds
within that platform, if there's any cost to be incurred
by doing that. And you don't want to be moving
your money around every day or every week.
Iona Bain (13:59):
No, no.
Pete Gladwell (13:59):
Not at all.
Iona Bain (13:59):
And I imagine that a lot of pension providers now
are trying to make that default fund, i. e., the
one that most of us will just be automatically put
into, they're trying to make those default funds more socially
responsible. Is that process ongoing?
Pete Gladwell (14:15):
I think the industry generally is becoming more cognisant of
the impact that it has. But again, you've got the
power to change the industry. Where people put their pensions
is what the industry then moves to accommodate. So if
you have lots of people telling their providers, " I don't
want to be invested in these sectors, and I really
care about these things," then providers like Legal & General and
(14:37):
others will start to create funds for you to invest
in those. So even within your choice, you can affect
what the industry does in future and affect that trend
in the industry towards being more considerate of the environmental
and social impact of the billions of pounds of money that
we steward.
Iona Bain (14:53):
Brilliant. So finally, Pete, what are your three top tips
for anyone who wants to learn more about social impact investing?
Pete Gladwell (15:00):
Yeah. Well, the first one, we've covered it but I
can't stress it enough. Your pension does have a power.
It can have real impact. It is worth thinking about
who you're entrusting your pension pot to. Because when it's
combined with millions of other people's pensions, it starts to
be a game- changing, a town- changing, a city- changing,
a country- changing amount of money.
Iona Bain (15:19):
Oh, I like that. That's great.
Pete Gladwell (15:21):
It's true. I think the second one is identifying the
need for investment in society. So making sure that whoever
it is who's stewarding your pension, they're thinking about the
needs for investment in places, but also what the right
type of investment is to meet that need. So we
discussed this earlier, but just to try and put some
meat on the bones, it's about making sure that if
you're looking for a long- term stable investment, you might
(15:44):
be thinking about lending money to the government. That's very long-
term, very secure, where you could also be investing in
affordable housing. If you're thinking about something short- term, then
you might be investing in health and tech startups. Those
are just two examples, but it's about meeting the social
need with the right type of money. And I can't
advise people on what the right type of manager is
or the right type of fund for them. That's why
(16:04):
you've got pensions advisors. But it's that understanding of what's
beneficial for society, but also your own stage in life.
Iona Bain (16:11):
Mm- hmm. Because we've spoken about the fact that it
doesn't have to be one or the other. It can
actually be a win- win if you get it right.
Pete Gladwell (16:17):
Exactly. And actually, my personal thesis is you could potentially get
enhanced financial returns if you're investing in things society really
needs. And that's where it gets really exciting. And then
lastly, we talked a bit about this, but making sure
your pension aligns with your own beliefs. That could be
religious beliefs, it could be personal beliefs. So looking at
what your pension is actually invested into at the moment,
(16:39):
is that aligned with your own beliefs? And then thinking
if it isn't, about how you can move it to
something that is more aligned. As I said, at the
time you need to think about the charges you might
incur, but it's still worth considering. Get advice if you
need to. But that's a really good way to make
sure that your money, including your pension, is empowering the
right types of companies, the right type of investments, and not
(17:00):
ones that you fundamentally personally disagree with.
Iona Bain (17:03):
Great. Okay. So I can summarize those tips as understand
the power that your pension has. Get informed about whether
your pension is indeed doing social impact investing. We've talked
about what you think that should look like today.
Pete Gladwell (17:15):
Yeah.
Iona Bain (17:16):
And thirdly, make sure that whatever you are investing in
is aligned with your own values. And if you're not
happy, then speak up and make that change.
Pete Gladwell (17:32):
Yeah.
Iona Bain (17:32):
Have I got that right?
Pete Gladwell (17:32):
Perfect.
Iona Bain (17:32):
Oh, good.
Pete Gladwell (17:32):
Thank you.
Iona Bain (17:32):
Excellent. All right.
Pete Gladwell (17:32):
My job here is done.
Iona Bain (17:32):
Thanks very much, Pete. So interesting to hear about all the
ways that our pension money is being used for good out there
in the world. We're going to come back to the
topic of pensions, including the big debate, property versus pensions.
But in the meantime, I'd love it if you could
follow the podcast, leave us a review, and help others
get a little bit richer too. You can keep up
with the show on TikTok, Instagram, and YouTube. Follow us
(17:56):
at Legal & General. Thanks for listening. Until next time, see
you soon.
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