Explainer | 6 minute read

How your pension invests in a sustainable future

Your pension doesn't just support you in later life - it supports the planet too.

We’ve received many queries from members asking about the sustainability of their pension pots with us in recent years. It’s something we’ve been working hard to improve and, between 2023 and 2024, we introduced our new range of sustainable investment options.

Most Creative Pension Trust members use our ‘default investment strategy’, leaving the investment decision-making to us. Our new strategy, Cushon Core, has the primary goal of growing your pension pot, but doing it in a much more sustainable way.

How Cushon Core works over time

When you’re younger, Cushon Core mainly invests in global equities – leading companies from all over the world with high growth potential – and in some global bonds. This mixture of investments is designed to give your pension long-term growth.

As you head towards retirement, we start shifting your investments to bonds and cash, aiming to protect your pot from the bigger ups and downs that occur in investment markets from time to time. We start these changes 7 years before your Target Retirement Age. This is 65, although you can change it to suit your plans using the Creative Pension Trust Member Portal.

Growth Phase – Investing with a positive impact

We invest your pension in a way that does far less harm to the planet. Cushon Core aligns with the United Nations Sustainable Development Goals (SDGs), which means we prioritise investments in companies with greener, more sustainable practices. You benefit from long-term growth while contributing to a cleaner, more sustainable future.

We’re not only committed to securing your financial future, but also ensuring a sustainable world for you to retire into. We see climate change as a financially material risk. Put simply, we believe the risk posed by a changing climate is not being accurately reflected by the market and asset valuations may be impacted over time.

Therefore, we are striving to build climate risk resilience to your pot by carefully minimising our exposure to the losers, and capturing the potential winners (such as clean energy generation) of a transitioning global economy, with the goal of maximising your pot for retirement.

1) Cushon Global Equity fund: 90%

We invest 90% of your pension in global equities to maximise long-term growth. These include well-known brands like Apple, Microsoft, AstraZeneca, and Tesco. We’ve partnered with Macquarie to manage this Sustainable True Index, which aligns with the United Nations Sustainable Development Goals (UN SDGs).

By excluding companies that don’t meet these standards, your investments focus on those making a positive environmental and social impact. Our index also targets a 7% annual reduction in carbon emissions, ensuring your portfolio grows sustainably without compromising on performance. It closely tracks the FTSE All World index, and as the world moves towards Net Zero, we only expect it to perform better.

UN Sustainable Development Goals:

2) Cushon Global Bonds fund: 10%

Within our bond fund, we spread your investments across four strategies:

NinetyOne Total Return Credit – 3.2%:

A flexible approach that adapts to market conditions, supporting companies on their journey to net zero by 2030. This dynamic strategy is designed to adapt to ever-changing market conditions.

During uncertain times, we take a defensive approach to protect your investments by lending to well-established companies with strong credit ratings. Similarly in more favourable conditions, the strategy may shift to lending to growing, less mature companies with the aim to capture a higher return on investment.

Wellington Global Impact Bond Fund – 2.5%:

This is an impact fund, meaning investments are made with the intention to generate a positive, measurable social and environmental impact, alongside a financial return. The fund invests primarily in investment grade (safer) bonds, funding companies who seek to make a positive impact on themes such as clean water and sanitation, education and job training and alternative energy.

Lombard Odier TargetNetZero Corporate Bond Fund – 2.5%:

Focused on real-world decarbonisation, this fund supports companies with credible strategies to reduce carbon emissions and reach net zero by 2050. We target companies that may not necessarily have low emissions today, but have credible decarbonisation strategies and look towards a net zero world.

LGIM Future World GBP Corporate Bond Fund – 1.8%:

The fund employs an index tracking strategy, aiming to replicate the performance of the Solactive L&G ESG GBP Investment Grade Corporate TR Index. The index aims to provide exposure to the GBP corporate bond markets while reflecting significant environmental, social and corporate governance (ESG) issues.

Easing into retirement

7 years before your Target Retirement Age, your pension pot will automatically move towards investments designed to shield the value of your pension from some of the bigger ups and downs in investment markets.

Here’s a breakdown of how those investments change during those 7 years leading up to your Target Retirement Age:

Factsheets

More information and performance data for the funds we use in Cushon Core can be found below.

Cushon Fund Phase Underlying Funds We Use
Cushon Global Equity Growth Macquarie Sustainable True Index
Cushon Global Bonds Growth

Lombard Odier TargetNetZero Global IG Corporate

Wellington Global Impact Bond Fund

NinetyOne Global Total Return Credit

LGIM - Future World Corporate GBP Index

Cushon Inflation-Linked Governemnt Bonds Glidepath LGIM AP Over 5 Year Index Linked Gifts
Cushon Sterling Cash Glidepath LGIM AR Cash

Risk Warnings

When you invest, there are always associated risks that you need to be aware of.

Investment risk: This is the risk that the value of your pension may go down as well as up. As with all investments, you may get back less than you paid in. It’s important to remember that your pension value can go down as well as up, even as you get closer to your Target Age. 

We will automatically move some of your investments to ones that are considered more cautious as you get closer to your Target Age to help protect the value of your pension from the bigger ups and downs in investment markets. However, we cannot offer any guarantees.

Liquidity risk: This is the risk that some investments cannot be sold as quickly as others. To give your pension the opportunity to grow for the long term, we invest in a range of different types of assets. This means some of your pension investments will be less ‘liquid’ than others. 

Whilst this makes them suitable for supporting the long-term growth of your pension, it also means there may be, on very limited occasions, a waiting period imposed on cashing in your pension e.g. transferring your pension or taking your pension in one lump sum at short notice.

Investment objective risk: This is the risk that the Cushon Core Investment Strategy might not meet its investment objectives which could mean your savings outcomes are not realised. 

The Cushon Core Investment Strategy has been designed to meet the needs of most of our members, but this doesn’t mean that it is suitable for your particular savings goals or that it will meet its objectives. It’s important that you review your investments to make sure they align with your future plans.

Financial guidance and advice: Your choice of pension investments can have a big effect on your pot value at retirement. If you are in any doubt about which fund is right for you, you should speak to a financial adviser.