Millennials Look to Do Well, and Good, With Pension Investments

Kristen Ricaurte Knebel

Millennials want their employers to offer retirement plans, and they expect them to
fill those plans with socially responsible investments.

“Millennials want to know that the companies they invest in are aligned with their
values,” and they also want impressive returns on their investments, Heather Lord,
senior vice president, strategy and innovation with Capital Group, told Bloomberg

Investments with social impact are becoming more and more popular. These investments
can include green energy, companies that have women in senior management positions,
and companies that help disadvantaged communities.

Eighty-two percent of millennials say they’d prefer investments in their retirement
plan’s portfolio that promote the health and wellness of consumers and employees,
according to a survey by
Capital Group. That’s 10 percent more than baby boomers surveyed; 77 percent of Generation X felt
the same way.

Millennials want to take responsibility for their own retirement security, which may
be why they feel they can push for socially responsible investments. Other generations
often had traditional pension plans to rely on, which meant workers weren’t responsible
for choosing their own investments. But millennials were born into a system in which
traditional pensions were “ancient history,” Lord said.

Millennials are more likely to inquire about where their company’s money is going,
Grant Easterbrook, co-founder of Dream Forward 401(k), told Bloomberg BNA. Dream Forward
is a tech-focused retirement plan provider that offers socially responsible funds
options in plans.

“Millennials want to be successful and also have some kind of impact in their life,”
Easterbrook said.

Careful Investments

Just because millennials and others want to see socially responsible investments in
their retirement plans doesn’t mean that employers should rush to overload their platforms
with them. There aren’t clear benchmarks for socially responsible funds, and they
can be hard to compare because they’re defined differently depending on whom you ask.

Companies will need a good balance of traditional and socially responsible investments,
Easterbrook said.

The Labor Department issued
guidance on socially responsible investments in 2015 aimed at giving plan fiduciaries more
comfort when selecting them for their plans. The agency said it feared previous guidance
had dissuaded such investing.

The More Things Change ..

Despite a more transient approach to jobs, a majority of younger workers think it’s
important to be loyal to their employers, Capital Group found.

“There’s a been a decoupling of longevity and loyalty,” Lord said. While one-third
of millennials say they’re involved with the gig economy, they still value loyalty
to their employer at the same rate as their generational counterparts, at around 69

Millennials also still value traditional workplace benefits like retirement and health
plans. Eighty percent of millennials expect employers to offer a retirement plan,
compared with 69 percent of Generation X and 71 percent of baby boomers.

Millennials are also looking for more financial security for themselves and their
children. That’s because many found themselves strapped with debt from their college
educations. They want to make sure the same thing doesn’t happen to their kids, Lord

One-third of those surveyed said they’d like it if their employer offered a 529 savings
plan for their children’s college education. That’s in step with the 31 percent who
say they’re worried about being able to pay for their kids’ college education.

Not many employers offer 529 plans now, but that benefit could be on the rise if more
young workers start asking for it, Lord said.

To contact the reporter on this story: Kristen Ricaurte Knebel in Washington at

To contact the editor responsible for this story: Jo-el J. Meyer at

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

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