What's hiding in your pension? How to find out where your money is invested and take control

Independent

7 hours ago

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If you have a workplace pension, your money is most likely in a default fund: a ready-made mix of investments designed for the average saver.
These funds aim for long-term growth by spreading risk across global markets, typically including equities (like shares in companies), bonds, property, and cash. On paper, it's a sensible, low-effort option.
But dig deeper, and you may find your pension is funding sectors you'd rather avoid, such as fossil fuels, weapons, tobacco, and controversial mining firms.
A recent government report reveals 90 per cent of employees stick with their default fund.
That's not necessarily because it's the right fit, but because switching feels complex or isn't front-of-mind.
Ben Faulkner, marketing director at ethical financial planners EQ Investors, told The Independent: 'A significant portion of employees are keen to invest responsibly and, while pension schemes typically have ethical options available, we know that most people stick with their default fund. This is a missed opportunity for aligning pensions with personal values.'
Here's how to see where your pension sits - and how to take action if you don't like what you find.
Which companies are in default pension funds?
Default funds typically track mainstream indices like the FTSE 100 or MSCI World. An index is simply a collection of major companies used to represent market performance.
While some default funds now screen out certain controversial sectors, this isn't standard and varies widely by provider - so it's up to you to check.
Fossil fuels
Fossil fuels are the biggest driver of climate change, responsible for around 75 per cent of global greenhouse gas emissions. But many default pensions still invest in oil and gas giants like BP, Shell, Chevron and ExxonMobil.
Make My Money Matter estimated that UK pension schemes collectively hold around £88bn in fossil fuel investments - roughly £3,000 per pension holder.
Public sector schemes are among the largest investors: Friends of the Earth found UK local government pensions hold more than £16bn in fossil fuel assets, including companies involved in new oil and gas exploration.
Tobacco
Major tobacco brands such as British American Tobacco, Philip Morris International and Imperial Brands are regularly included in default pension portfolios.
Despite the World Health Organisation linking over eight million deaths a year to tobacco use, only a few UK pension providers have actively excluded tobacco from their default options.
Defence and arms
Some people see defence as essential, especially amid global conflicts, while others prefer not to profit from weapons. Default funds often include defence firms, and many don't screen out those linked to controversial weapons like cluster munitions or landmines.
For example in March, Nest and The People's Pension announced they would exclude arms firms from their ethical funds - but not from their default ones.
Mining
Global giants like Glencore, BHP and Rio Tinto are common in default funds, despite criticism over environmental damage, community impact and governance. Some mining companies have wide-ranging geographical footprints, while some target specific locations or commodities.
What about returns?
Investing sustainably isn't just about ethics - it can also be financially smart.
'Studies show that companies with strong ESG (environmental, social and governance) practices tend to deliver better long-term returns,' Mr Faulkner said.
'These companies are often better equipped to avoid reputational damage, financial penalties, and regulatory breaches, all of which can undermine shareholder value.'
Research from Morgan Stanley shows that ESG investments can match or even outperform traditional investments over the long term.
How to check your pension's investments
Log into your pension portal. Most providers offer dashboards or apps where you can check your fund. Look for the fund name and any factsheets or top holdings. If you're unsure how to log in, ask your HR team or pension provider.
Read the fund factsheets. These outline investment strategies, asset allocation and key holdings. Some indicate whether they apply ethical screening or exclude certain sectors.
Check independent rankings. Organisations like ShareAction, Ethical Consumer and Good With Money regularly publish reports rating pension funds on sustainability. These look at exclusions, transparency and action on issues like climate change and human rights.
Consider switching funds. Most schemes let you move from the default to ESG or sustainable options, which may exclude certain sectors or prioritise companies with better environmental and social records.
Mr Faulkner added a final reminder that it must be an employee decision to change. 'Concern about the environment and climate change in particular is increasing, but the onus is on employees to take action if they want to switch,' he said.
When investing, your capital is at risk and you may get back less than invested. Past performance doesn't guarantee future results.