For anyone interested in ensuring that their money is invested in a way that reflects their ethical concerns, the options have been sparse. Ethical personal pensions are available, but occupational schemes are limited by the primary focus of their funds' trustees being based on a remit to act in the interests of all members, not just those concerned with social or environmental justice.
All that may change. From next July, pension scheme trustees will be required to disclose "the extent to which social, environmental, or ethical considerations are taken into account in the selection, retention and realisation of investments".
This clause, added to the 1995 Pensions Act and passed by Parliament only a few weeks ago, could have far-reaching consequences for scheme members.
Opinions differ about whether it is a good or bad development. Alan Pickering, chairman of the National Association of Pension Funds (NAPF) can see both sides of the issue. "This will bring increased transparency to the running of pension funds but it may open the way for attempts to direct trustees on investment policy by pressure groups, perhaps with a very narrow interest. Suppose we get 60 activists picketing a trustee meeting on, say, Third World debt or the sale of weapons to a repressive regime. Single issues could make it difficult for trustees to meet their responsibility to act in the best interest of all the members."
Competing interpretations of this fiduciary responsibility are at the heart of the debate over whether any considerations apart from strictly financial ones should be used by scheme trustees to decide on investment policy. Trustees are voluntary and unpaid, but they can be held legally and financially liable if a scheme fails to meet its obligations to members and they can be shown to have been negligent.
Defined benefit schemes - those that are set up to pay a pension equivalent to a fraction or percentage of final salary - are often designed to render the employer company liable for any under-funding. If the scheme cannot meet pension liabilities, members can sue the firm for the extra amount needed.
The 1995 Act was introduced in the wake of the Maxwell scandal, in which the pension fund of a major public company had been ransacked by trustees and its funds utilised to buy company shares in an illegal scheme to support the share price.
Mr Pickering says: "I am not convinced of how well the original intention behind the Act sits with the introduction of these …