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DC Members Open to Higher Fees for ESG – LGIM  

Three quarters of defined contribution (DC) pension members would pay higher fees for increased exposure to ESG private market assets such as renewable energy infrastructure and affordable housing, according to Legal & General Investment Management (LGIM). Its survey of over 4,000 UK members found that 65% of the group reported that inflation had made them think harder about the need to invest in renewable energy and sustainable food production in order to increase the UK’s long-term economic resilience. However, member appetite for illiquid assets was tempered by the need for private markets to demonstrate robust performance. Less than a quarter (22%) of those in Gen Z said they would be willing to pay more to invest in illiquid assets irrespective of performance, falling to 7% among Baby Boomers. Rita Butler-Jones, Head of DC at LGIM said: “A high proportion of members are open to greater allocations to ESG private market assets such as renewable energy and affordable housing sends a clear message to the pensions industry. The onus is on us to demonstrate where we believe illiquid assets can play a meaningful role in aiming to deliver better overall member outcomes – and in the process, unlock the potential power of DC capital to invest in the UK and beyond.” 

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