The way British people approach retirement is shifting, with younger generations prioritising ethical investment over financial returns — even if it means working beyond the standard retirement age, new research suggests.
New data reveals that 86 percent of Gen Z (18–29-year-olds) would prefer to accept lower returns on their pension savings than have their money fund industries they consider socially or environmentally harmful.
For them, aligning their pensions with their values is non-negotiable, even at the cost of financial sacrifices. Millennials (30–44-year-olds) share this commitment, with 73 percent saying they would rather work longer than support industries they view as damaging, according to research commissioned by wealth management firm Moneyfarm.
The general population, however, is less ethically focused, with only 34 percent willing to prioritise moral considerations over returns. It shows a generational divide in how workers view the purpose of pension investments and reflects broader trends in workplace wellbeing and sustainability.
Which Industries Are Being Rejected?
The research identified industries that Britons most oppose funding through their pensions. Tobacco led the list, with 44 percent of respondents unwilling to have their retirement savings invested in it. Other industries facing scrutiny include alcohol (31 percent), defence and ammunition (25 percent), fast fashion (22 percent) and oil and gas (21 percent).
But not everyone shares these concerns, with 31 percent of respondents expressing no reservations about where their pension money is invested.
Despite the strong ethical stance of younger generations, widespread confusion about pensions prevents many Brits from taking control of their investments. While 76 percent say it matters where their pension is invested, 42 percent admitted they have no idea which industries their savings are funding.
Nearly half of respondents (43 percent) were unaware they could select the funds their pension supports. And 52 percent admitted they wouldn’t know how to check whether their pension aligns with their values.
Generational Divide in Pension Priorities
Gen Z is leading the charge for ethical investing, with 90 percent actively ensuring their pensions reflect their values. In contrast, older generations approaching retirement are more likely to prioritise financial returns over environmental or social considerations.
Carina Chambers, technical pensions expert at Moneyfarm, said that while pensions were vital for financial security, the choice of investments was mostly overlooked.
“We also see the generational divide in attitudes towards ethical investing is striking,” she said. “While Gen Z shows a strong preference for aligning their investments with their values, even at the cost of financial returns, older generations who are that much closer to retirement, tend to prioritise higher returns over ethical considerations.”
Auto-enrolment in workplace pensions contributes to the lack of awareness around investment options, with most workers defaulting into standard plans, said Chambers.
“The majority of people (54 percent) are auto-enrolled into a workplace pension, which typically puts them into a standard plan. Many don’t amend or select funds that are more personal and tailored to their values and aspirations. But people can change the fund their workplace pension is invested in by contacting the provider directly.”
Rethinking Retirement in the Future of Work
This shift toward ethical investing reflects broader changes in workplace culture, where employees increasingly expect organisations to align with their values. As younger workers reshape the retirement landscape, employers and pension providers must adapt to meet demand for sustainability and ethical options.
Moneyfarm’s research highlights the need for greater transparency and education around pensions, empowering workers to align their financial decisions with their long-term goals and values.
The findings, based on a survey of 2,000 UK adults conducted by Perspectus Global in December 2024, underscore the growing importance of sustainability and personalisation in the future of work and retirement planning.