Your pension may be paid for in blood

Fund members can make a stand for abused workers, says Kim Hunter

Footballs, training shoes and carpets made by children on starvation wages, health and safety conditions so utterly lacking that a factory burns down with all its workers inside, trade unionists intimidated, sacked, or even killed. We have all heard the horror stories. It can be soul- destroying to be aware of the lot meted out to workers in developing countries, and yet feel impotent to act.

According to War on Want, the development charity, there is something that can be done. A research paper by the company, Invest in Freedom, suggests people in Britain have a weapon - their occupational pension funds.

British employees have pounds 450bn of pension money invested in the stock market. Much of it ends up overseas, either through multinational corporations or, increasingly, through direct investment in so-called emerging markets.

Governments are so desperate to attract these multinationals that they often leave their own citizens open to abuse. Yet multinationals are themselves dependent on their investors, who could use their votes at a company's annual general meeting in favour of basic employment rights.

War on Want is calling on pension scheme members to present its document, Charter for Fair Employment, to their trustees. The document backs the right of employees to be free of enforced or bonded labour, discrimination, oppressive or dangerous working conditions, and to be able to organise as a union. Margaret Lynch, a director of War on Want, stresses she is not calling for a boycott of offending companies. Research in Bangladesh shows workers there want the factories to stay - they just want improved conditions.

The question is, will it work? To have some positive effect such a campaign must have some sort of public mandate. If opinion polls are to be believed, this may be the case. Most surveys over the past five years have indicated a willingness by those polled to pay higher taxes to support social spending.

Many lawyers, like much of the pensions industry, claim that reluctance to act is caused by the fact that a trustee's primary duty is to act in the best financial interests of all a fund's beneficiaries, including present retirees and future members. It is not the trustees' place, say the lawyers, to shilly-shally around with politics and morality; ethics can only be taken into consideration where two morally differing investment alternatives have exactly the same financial prospects.

Yet oft-cited case law relates to politically motivated investment boycotts, not shareholder action or corporate governance, areas which remain legally untested. If trustees were to be sued over voting, a plaintiff would have to argue that the fund's financial interests had been damaged. Given the long-term investment horizon of pension funds, this would be hard to do.

In fact, as Stuart Bell, researcher with the Pensions Investment Research Council, says, a moral attitude often means money in the pocket: "A company's profile is of value to it, particularly if it has a consumer base," he says. "Shell's activities in Nigeria were really affecting its share price."

Robin Ellison, head of pensions at Eversheds, the law firm, points to factors such as the US legal requirement for a pension fund to treat its voting right as an asset and to use it, plus two UK reports on corporate governance, as signs of change in this direction.

The 1995 Pensions Act insists on a formal investment policy. According to the Goode Report on which it is based, that policy could include ethics, "so long as [the trustees] treat the interests of beneficiaries as paramount," and act with care and prudence.

The problem, then, is not so much legal barriers as the fact that much of the industry has not caught up with sentiment and practice. For example, the National Association of Pension Funds' most recent council meeting rejected the campaign.

Pensions managers and trustees, for their part, are bewildered by the demands for ethical action that keep on crossing their desks. Post Office Pension scheme chief executive Michael Duncombe says: "I'll say the same to War on Want as to Islamic funds and ethical funds: it's impossible to run a pension fund like that and by law you don't have to." Similarly, Marks & Spencer has just ratified a policy to vote with the management of the companies it invests in.

Yet some funds and managers are more in touch. Friends Provident is considered the specialist in ethical investment. Richard Philipson, who devised its pooled pension versions, says: "There is a danger that by simply excluding investments you lose all potential influence." Friends Provident writes to companies and can sometimes get good and fairly quick results. .

Hermes, the telecommunications fund manager has its own corporate governance department; while big fund managers such as PDFM and Mercury Asset Management look carefully at corporate governance issues.

None of this will change the world overnight, but if the campaign prevents just a few of the more gruesome deaths and injuries commonly meted out to many Third World workers, War on Want may judge it to have been a success. Equally importantly, those of us with occupational pensions need not worry that our retirement income is being paid for with the blood of others less fortunate than ourselves.

War on Want, Steve Tibbett, tel 0171 620 1111; TUC, Joanne Seagers, tel 636 4030

Start your day with The Independent, sign up for daily news emails
Suggested Topics
Have you tried new the Independent Digital Edition apps?
peopleMathematician John Nash inspired the film Beautiful Mind
Richard Blair is concerned the trenches are falling into disrepair
newsGeorge Orwell's son wants to save war site that inspired book
Life and Style
Audrey Hepburn with Hubert De Givenchy, whose well-cut black tuxedo is a 'timeless look'
fashionIt may be a paradox, but the industry loves it
Arts and Entertainment
The pair in their heyday in 1967
Life and Style
fashionFrom bathing dresses in the twenties to modern bikinis
Finacial products from our partners
Property search
Up and away: rates will rise but your mortgage won't escape its moorings with a long-term fix

Is a 10 year mortgage deal a fix too far?

A cut-price deal for a decade-long home loan - where's the problem? Only, says Simon Read, that circumstances can change and it won't be easy to get out
In a surprise move the Tories have decided against putting a career politician into the job. Instead they’ve handed the responsibility to campaigner Ros Altmann

New pensions minister has massive job on her hands

The Tories have appointed campaigner Ros Altmann to the post

Promises, promises: David Cameron talks to staff at Asda's head office in Leeds today

General Election 2015: How you vote next week could affect your finances

Rival party pledges could shrink your savings or grow your nest egg
Logos for the 'Big Six'; energy companies (top row from left) British Gas, EDF, RWE npower, (bottom row from left) SSE, E.ON and ScottishPower

Winter heating underpayment brings summer pain

One reader’s monthly direct debit charge has been increased by 62 per cent

Almost 15,000 people died last winter through living in cold homes that they couldn’t afford to heat

Social tenants locked into energy tariff for 40 years

Many Londoners who live in social housing estates are not allowed to switch because their landlord has ‘locked’ them in to buying from one supplier

Will your credit card rewards be scrapped following new EU rules on charges?

Providers are unhappy with new EU rules - but ultimately it is customers who will have to foot the bill
There remain more than a million unclaimed Premium Bond prizes worth collectively around £48m

Have you won £1m in the May Premium Bonds draw?

More than £60m was paid out to more than 2 million prizewinners this month

The 0 per cent introductory deals that credit cards offer are one of the most odious tricks

Beware credit card firms’ odious tricks

Why can’t we just have open and honest charges, without all the cross-subsiding?

The pound’s recent strength against the euro could be hit by economic uncertainty under a new government

How planning can make your travel cash go further

With the pound at a high against the euro, it pays to buy now before uncertainty post-election

Put the phone down on the coldcallers who see pension liberation as an opportunity to liberate your pension from you

Pension freedoms: How to deal with cold calls from scammers

Sean O'Grady offers advice on keeping your money safe
Switching to a better bank account is much easier than it used to be

More people are switching current accounts – but what do the figures mean?

Experts disagree about the 7% increase over the past year

The chance of getting what appears to be free money can be hugely attractive, especially to first-time buyers who can be fooled into thinking it’s extra cash to buy the essential new items they need for their dream home.

Beware the boom in cashback mortgage deals

Too many mortgages are being sold with misleading gimmicks

The firm’s revenues slumped by a third to £217 million in a disastrous 2014

Wonga results could get even worse this year, chief admits

The firm’s revenues slumped by a third to £217 million in 2014

The cost of a buildings policy has dropped by 10.1 per cent over the year, with the cost of a contents policy falling by 8.2 per cent

Simon Read: Mild winter cuts the cost of home insurance

The average quote for a buildings and contents policy has fallen by 3.6 per cent

Don't count your retirement money yet: employers will stop receiving a pension rebate next year and their staff may lose out

Defined-benefit pension schemes: Rebate change in 2016 may leave you out of pocket

Employees in defined-benefit schemes are held up as the lucky ones, but the state pension scheme will be overhauled in April 2016
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Guru Careers: Software Developer / C# Developer

    £40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...

    Neil Pavier: Management Accountant

    £45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...

    Sheridan Maine: Commercial Accountant

    £45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...

    Laura Norton: Project Accountant

    £50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...

    Day In a Page

    Abuse - and the hell that came afterwards

    Abuse - and the hell that follows

    James Rhodes on the extraordinary legal battle to publish his memoir
    Why we need a 'tranquility map' of England, according to campaigners

    It's oh so quiet!

    The case for a 'tranquility map' of England
    'Timeless fashion': It may be a paradox, but the industry loves it

    'Timeless fashion'

    It may be a paradox, but the industry loves it
    If the West needs a bridge to the 'moderates' inside Isis, maybe we could have done with Osama bin Laden staying alive after all

    Could have done with Osama bin Laden staying alive?

    Robert Fisk on the Fountainheads of World Evil in 2011 - and 2015
    New exhibition celebrates the evolution of swimwear

    Evolution of swimwear

    From bathing dresses in the twenties to modern bikinis
    Sun, sex and an anthropological study: One British academic's summer of hell in Magaluf

    Sun, sex and an anthropological study

    One academic’s summer of hell in Magaluf
    From Shakespeare to Rising Damp... to Vicious

    Frances de la Tour's 50-year triumph

    'Rising Damp' brought De la Tour such recognition that she could be forgiven if she'd never been able to move on. But at 70, she continues to flourish - and to beguile
    'That Whitsun, I was late getting away...'

    Ian McMillan on the Whitsun Weddings

    This weekend is Whitsun, and while the festival may no longer resonate, Larkin's best-loved poem, lives on - along with the train journey at the heart of it
    Kathryn Williams explores the works and influences of Sylvia Plath in a new light

    Songs from the bell jar

    Kathryn Williams explores the works and influences of Sylvia Plath
    How one man's day in high heels showed him that Cannes must change its 'no flats' policy

    One man's day in high heels

    ...showed him that Cannes must change its 'flats' policy
    Is a quiet crusade to reform executive pay bearing fruit?

    Is a quiet crusade to reform executive pay bearing fruit?

    Dominic Rossi of Fidelity says his pressure on business to control rewards is working. But why aren’t other fund managers helping?
    The King David Hotel gives precious work to Palestinians - unless peace talks are on

    King David Hotel: Palestinians not included

    The King David is special to Jerusalem. Nick Kochan checked in and discovered it has some special arrangements, too
    More people moving from Australia to New Zealand than in the other direction for first time in 24 years

    End of the Aussie brain drain

    More people moving from Australia to New Zealand than in the other direction for first time in 24 years
    Meditation is touted as a cure for mental instability but can it actually be bad for you?

    Can meditation be bad for you?

    Researching a mass murder, Dr Miguel Farias discovered that, far from bringing inner peace, meditation can leave devotees in pieces
    Eurovision 2015: Australians will be cheering on their first-ever entrant this Saturday

    Australia's first-ever Eurovision entrant

    Australia, a nation of kitsch-worshippers, has always loved the Eurovision Song Contest. Maggie Alderson says it'll fit in fine