Britain’s Biggest Pension Fund Invests in Israeli Weapons Firm Elbit Systems

A government-backed pension scheme is investing UK workers’ retirement funds into a key Israeli weapons manufacturer, Novara Media can reveal. 

Employees saving into Nest’s Retirement Date Fund from December 2024 are funding Elbit Systems Ltd, Israel’s largest defence firm, which advertises its products as battle-tested by the Israeli military in operations in Palestine. 

Around one in three workers in the UK reportedly save with Nest, making it the biggest in terms of membership with 13.5 million savers and £45.3bn in assets under management. 

Nest’s Retirement Date Fund began investing in Elbit 15 months after Israel’s assault on Gaza began, and six months after UN experts warned that failure to mitigate business relationships with arms manufacturers supplying Israel could result in “repercussions for complicity in potential atrocity crimes”. 

Nest told Novara Media that its Higher Risk Fund also invests in Elbit, and that customers’ money across both funds may have had prior exposure to Elbit before December 2024 as part of investments handled by UBS Asset Management into the FTSE All-World Index. 

Elbit has supplied Israel with drones, munitions, guided rocket systems and reconnaissance capabilities for use in its ongoing war on Gaza, which has killed at least 61,000 Palestinians since October 2023. 

The company manufactures the Hermes 450 drone, identified as having been used in the attack that killed seven World Central Kitchen aid workers in April 2024, three of whom were UK nationals. It also makes the MPR 500 multi-purpose bomb, designed for use in “densely populated urban warfare” and containing 26,000 controlled fragments for “high kill probability”. 

The Haifa-based company reported increased profits last week thanks to a 20% increase in aerospace sales, largely of precision-guided munitions.

Nest claims to take a “responsible” approach to investment. On its website, it states: “We believe our approach isn’t just better for your pocket – it helps people and the planet we live on, too. We call this responsible investment.”

In a live chat on 23 May, a Nest agent said: “The returns from defence companies are likely good and maybe that’s the reason our fund managers have decided to add this company.”

Nest is used by employers from a wide range of sectors, including fast fashion retailer H&M, publisher Random House Group, pub chain Greene King and the universities of Manchester, Glasgow and Southampton. 

Of the 13.5 million UK workers currently saving into Nest – a low-cost scheme set up by the government in 2010 to make pension auto-enrolment easier for employers – 99% remain in its “default investment strategy” (the Nest Retirement Data Fund) rather than alternatives such as Nest Ethical Fund or Nest Sharia Fund. 

It has been compulsory for employers to enrol their staff into workplace pension schemes since October 2012. With auto-enrolment, employees save automatically with a scheme unless they specifically choose to opt out, many of them likely unaware of all of the 2,408 companies Nest invests their pensions in. 

The Nest advisor agent said: “Defence companies already form part of Nest’s portfolio. If you’re in the default fund, your money is already in a Nest fund that invests in defence companies.”

Foreign surgeons volunteering in Gaza told the Guardian in July last year that many deaths, amputations and life-changing wounds to children they have treated came from missiles and shells packed with additional metal designed to fragment into tiny shards of shrapnel. They are fired by the IDF into areas crowded with civilians. 

Explosives experts found the doctors’ accounts of tiny entry wounds and extensive internal damage to the bodies of small children consistent with Elbit’s M339 round and the M329 APAM shell. According to Elbit, “the controlled fragmentation ensures broad coverage at high density, making it difficult for enemy forces to avoid.”

Ben Jamal, director of the Palestine Solidarity Campaign, told Novara Media: “As we watch Israel use starvation as a weapon of war, as well as daily bombardments of an already devastated enclave, it is morally and legally incumbent upon pension funds to ensure they aren’t invested in or profiting from the slaughter of over 60,000 men, women and children. 

“For Nest […] to be buying shares in Elbit Systems, an Israeli weapons manufacturer that is supplying the Israeli army during a genocide, defies any possible justification. British workers don’t want their wages funding war crimes, as the many demands for divestment from unions and local authorities shows. Nest must immediately divest.” 

Elbit factories have consistently been targeted by direct action group Palestine Action. Since 2021, Palestine Action activists have occupied, disrupted and damaged various Elbit sites in the UK, including in Bristol, Oldham, South Gloucestershire, Braunstone and Tamworth. 

In 2021, East Sussex Pension Fund divested from Elbit after months of lobbying by campaigners. 

A Nest spokesperson told Novara Media: “Our responsible investment approach encompasses a number of policies to help us manage our portfolio in our members’ interests. This includes our controversial weapons divestment policy which is closely aligned with UK and international law.

“The UN Global Compact is embedded across our investment portfolio, requiring our fund managers to screen our investments for breaches against the principles of the compact when investing on our behalf. While we have no current plans to change our investment strategy, we continue to keep it under review.”

A Telegraph investigation from March found that workers are paying thousands of pounds in fees to cover £1.2bn in debt and six-figure salaries of senior figures at Nest.