The Great Pension Paradox: How Your Retirement Savings Are Making You Poorer

For years, we’ve been told that our pension funds are being “invested responsibly”  that they are helping to build a greener, fairer, more sustainable future while securing our retirement.

But a disturbing truth is now emerging:
Your pension is increasingly invested in the very policies and projects that are making your cost of living higher, your energy bills more expensive, and your country poorer.

This is not a conspiracy. It is something far worse.

It is a systemic conflict of interest built into the heart of modern energy and financial policy.

The New Shape of Pension Fund Investing
Across the UK, Europe, Canada, Australia and the United States, large public and private pension funds have shifted huge amounts of money into:
Wind farms
Solar farms
Battery storage projects
Grid infrastructure
“Energy transition” private equity funds
ESG and “climate aligned” infrastructure vehicles.

In the UK, Local Government Pension Scheme (LGPS) funds and public sector schemes are actively encouraged by government guidance and regulators to show “climate alignment” in their portfolios.
This is no longer marginal. It is now core strategy.
The sales pitch is always the same:
“These are safe, long-term, inflation-linked, government-backed infrastructure assets.”
And for a long time, they looked exactly like that.

Why Pension Funds Were Pushed This Way
Three forces drove this shift.
1. Political and regulatory pressure
Pension trustees are now required to:
Report “climate risk”
Demonstrate Net Zero alignment
Show ESG compliance
Follow guidance from the DWP, TPR, FCA and Treasury
This doesn’t just allow green investment. It channels capital into it.
2. The death of real yields
After 15 years of near-zero or negative real interest rates, pension funds went hunting for:
Long-duration assets
Inflation-linked cashflows
Government-backed revenue streams
Renewable infrastructure was sold as:
“The new index-linked gilt , but with a better return.”
Subsidies, Contracts for Difference, grid payments and state guarantees made these projects look de-risked.
3. Herd behaviour and career risk
Fund managers are judged relative to their peers.
Nobody wants to be the only one not “aligned”.
So the entire industry piled into the same trade.

The Circular Money Machine Nobody Talks About
Here’s where it gets uncomfortable.
The same people who:
Pay higher energy bills
Pay higher standing charges
Pay higher taxes for grid upgrades
Pay higher food and rent due to energy costs
…are also the members of the pension funds that:
Own the wind farms
Own the solar farms
Own the battery projects
Own the grid infrastructure
Earn returns funded by those same bills and taxes
So we have created a closed financial loop:
Citizens → bills & taxes → subsidies & guarantees → infrastructure returns → pension funds → citizens
On paper, it looks like “responsible investment”.
In reality, it is financial self-cannibalism.

Are Pension Funds Profiting From Making Their Own Members Poorer?
Not deliberately.
But structurally?
Yes.
High energy costs:
Drive deindustrialisation
Reduce productivity
Suppress real wages
Increase poverty
Increase cold homes
Increase health problems
Shorten life expectancy
Cold kills. Poverty kills. Economic decline kills.
Meanwhile, pension funds become dependent on the continuation of the policies causing this damage, because that’s what their assets are built on.
This is the darkest part of the system:
If Net Zero policy fails, a huge chunk of the pension asset base fails with it.
So large pools of capital now have a vested interest in policies that are making society poorer.

The First Cracks Are Appearing
We are now starting to see:
Wind projects failing financially
Write-downs and losses in “green infrastructure” funds
Lawsuits (like Aberdeen’s case against Federated Hermes)
Underperforming and illiquid ESG vehicles
Quiet revaluations and “reprofiling” of returns
These assets were sold as “safe”.
They are not.
They are politically engineered financial products.

This Isn’t a Plot. It’s Worse.
This is not a secret cabal.
It is:
Bureaucracy
Groupthink
Financial engineering
Political mandates
And moral cowardice
All locked together into a self-reinforcing machine that nobody is willing to stop.

What Pensions Are Supposed To Do.
Pension funds are supposed to:
Preserve purchasing power
Invest in the real productive economy
Support long-term prosperity
Instead, they are now:
Financialising government policy
Extracting rent from mandates and subsidies
Becoming hostages to an energy strategy that is economically destructive

The Real Scandal

The real headline is not:

“They are trying to kill people.”
It is this:
Public pensions have been turned into financial leverage for an energy experiment that is making their own members poorer.
That should horrify everyone , left, right, and centre.

The Question Nobody Is Asking.

If these policies are really making us richer, more secure, and more resilient
Why do they require permanent subsidies, permanent guarantees, and permanent coercion?
And if they are making us poorer
Why are our retirement savings being used to prop them up?

This Must Be Re-examined
We urgently need:
Full transparency of pension fund exposures
Honest accounting of true returns (after subsidies)
A separation between retirement security and ideological policy
And a return to investing in productive, reliable, affordable energy and industry
Because a country that eats its own future to sustain a political narrative does not stay wealthy for long.

Shane Oxer.   Campaigner for fairer and affordable energy