Paul Bucksey: in conversation with Smart Pension’s MD

Paul Bucksey, UK managing director of Smart Pension, is a pension-lifer. He has worked in the industry for over 20 years, at firms like Aegon, BlackRock and Fidelity to name a few, but he is now seeing real change in the role he has held since November 2020 – pensions are now more climate-conscious than ever before.

“What’s changed is that it has become much clearer there is a problem, and it’s hard to ignore.” Bucksey says. “The other change is that trustees are waking up to the fact that the best returns are going to be with companies that are at the forefront of change.”

Like many in the pension world, Smart Pension has established a net-zero target it is currently working towards. The firm has targeted net-zero emissions on its default growth fund by 2040 – 10 years ahead of the Paris Agreement’s 2050 goal. An ambitious target has also been set to halve its emissions on the fund by 2025.

The pension provider has made great strides in reallocating funds into sustainable practices. The master trust’s default investment strategy has over 70% focused in ESG funds, and with 90% of the firm's members involved in the strategy, Smart Pension is supporting the transition to sustainable practices.

With a focus on net zero, divestment from companies not meeting the required sustainable criteria has been a focus for Bucksey. However, he explains there is leeway with those laying the foundation for change. “We want to hold investments in companies that aren’t necessarily 100% green but are on the right journey,” Bucksey says. “We want to play an active role in decarbonising, but also cleaning up.

“There are two school of thought. One is that you should exclude every company out there that has some activity that is in some way bad. We’re not afraid of excluding so there are some cases of exclusions, for example, if it’s pure coal mining, controversial weapons, etc.”

“But it does mean we are quite happy to watch some of the big energy companies as they go on their journey from high polluting to renewable energy.”

An engaging issue

A key component in all of this is the perspective of members, according to Bucksey. Consumers are becoming more aware of what their money contributes, and pension savers are no different. The managing director wants them to know what they are investing in, and the climate change journey they are part of, but admits this engagement can be challenging.

“People have been looking for a silver bullet on engagement for a long time,” he says, when referring to the member engagement challenges pensions face. “The challenge is getting people to wake up to the fact that generating your paychecks later in life is expensive. This is even more challenging when you're having a cost-of-living crisis.”

As such, Smart Pension is actively investing in how it engages with its members – using technology to strengthen this relationship: "We regularly asked people, do they understand where the money's invested? Do they care where the money is invested?

“We think that can only help them feel a greater sense of ownership and therefore engagement.”

The need to work together

This cultural shift showcases both Smart Pension and Bucksey’s stance on sustainable practices. There is no method in achieving net-zero emissions without collaboration and supporting the sustainable journey with other firms, and this point is key for the managing director when asked his opinion on the crucial question: will we achieve net zero in time?

“Personally, I think we have to [reach net zero by 2050],” Bucksey answers. “If it was just the Western world then I think we would have a really good chance, however, recent geopolitical factors mean we must integrate them back into the global community to achieve this target.

“How do we reintegrate the likes of Russia and China into the global community and that political framework? I think China and Russia are hard ones, but I hope so.”