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7 May 2021

5th ITM Student Essay Competition - Runner Up Camilla O’Brien

What benefits could be realised by further diversifying trustee boards and other governance bodies in pensions (eg. IGCs)? What steps can be taken by the next generation of pensions professionals and the industry as a whole to improve diversity in this area?

Despite experiencing the ‘Zoom fatigue’ that most of us are, I attended an internal panel discussion as part of the recent International Women’s Day celebrations. A woman with one of the most impressive CVs in the industry described being told that she “wouldn’t like” being on a particular male-dominated trustee board because they “talk too much about cricket”. This received a few laughs, but highlights a deeper, more serious issue in the pensions industry.

The evidence on the lack of diversity on trustee boards isn’t just anecdotal:

  • One in five pension scheme trustees are female
  • 2.5% of trustees are under the age of 30 
  • Under 7% of trustees are over the age of 70
  • Representation for black, Asian and minority ethnic trustees is low

On average, most trustees are 54-year-old males with university degrees.¹ 

A major aspect of being a trustee is making decisions on discretionary benefits, as set out in scheme rules. Often, these decisions relate to death benefits or ill-health benefits. Given that these decisions relate to a variety of different lifestyles and family set-ups, greater diversity in trustee boards would aid in impartiality. For example, recent cases brought to The Pensions Ombudsman (TPO) related to the payment of benefits to a member’s partner, to whom he wasn’t married, but who had demonstrated financial dependence², and another to an ill health early retirement request from a member suffering from mental health issues³. Given that marriages between people of the opposite sex have been steadily declining in recent generations – there has been a 47% decrease since 1972⁴– a trustee board that includes younger members is more likely to include unmarried people, who may view dependency between two partners who have not officially married as a stronger commitment than older trustees accustomed to traditional marriage. The inclusion of more trustees with disabilities may also mean that a different perspective is brought to decisions on ill-health benefits. To highlight the importance of lived experience, the term ‘experts by experience’ has been coined – and widening expertise could only be an advantage to the fairness of trustee decisions.

Similarly, a benefit of having greater diversity in trustee boards is that it may raise awareness of particular issues. Although trustees try their utmost to fulfil their duty of care, without the direct experience of particular situations and requirements, this can fall short. Since auto-enrolment, the membership of schemes has skewed younger, so younger trustees may be required to better represent these members’ interests. This would also improve the proportion of women on trustee boards, as in older generations fewer women worked and even fewer held senior roles⁵. Although participation in a pension among women has risen from 40% (2012) to 86% (2019), the average woman in her 20s currently will retire with £100,000 less in her pension than her male peers⁶. On the other hand, members are living longer and working longer, so having trustees who are over 70 is also important. Likewise, representation for black, Asian, and minority ethnic members is important, as the UK’s overall ethnicity ‘pension gap’ was recently estimated to be 24.4% – women from an ethnic minority group experience a gap of 51.4% compared to their white male counterparts⁷. It is likely that a member of these communities will be more aware of how to improve their retirement outcomes, so their presence on a trustee board would be an advantage.

Recent reports don’t detail the prevalence of disabled or LGBT members on trustee boards, but Aegon uses a measure, the Aegon Retirement Readiness Index (ARRI), to gauge how prepared individuals are for retirement. Their findings showed that LGBT people in the UK have an ARRI score of 5.8, compared to 6.2 for heterosexual members. Since the decisions in Walker v Innospec⁸ and MB v Secretary of State for Work and Pensions⁹, the need for diversity to aid in the interest of LGBT people is clear. Specifically for transgender people, a more diverse trustee board may be crucial. The government suggests that transgender members of pension schemes who are unsure of their death benefits should discuss this with their employer or pension provider¹⁰, but given that 12% of trans people have been physically attacked by customers or colleagues for being trans, 26% aren’t open with anyone at work about being trans, and 33% of trans people have experienced bullying or abuse at work, it may take a lot of courage to discuss the issue with a trustee board as they stand now¹¹.

A major role of private pensions schemes that has developed over the years has been member education. Along with the usual disclosure requirements, current issues such as the danger of pensions scams and the relatively new pensions flexibilities introduced in 2015 also require trustees to inform members in an intelligible way. As members are surviving longer and are less able to rely on the State Pension for financial security in retirement¹², educating them on how pensions work and their importance is vital. The information provided to members has to be accurate, clear, relevant and in plain English, but trustees should also “think about the tone and language of any member communications in light of the demographics…of scheme membership”¹³. If you don’t have a diversity of trustees behind these communications to reflect the diversity of your employees, then that may impede any attempts at clear communication. Moreover, if the majority of your trustee board received a university education, they may find writing in plain English difficult.

Neurodiversity within trustee boards is key here. For many members of schemes who have conditions relating to processing or cognitive differences, communications from trustees regarding their pension can be inaccessible. Around 15% of the UK population is estimated to be neurodivergent¹⁴, which includes people with Attention Deficit Disorders, Autism, Dyslexia, and Dyspraxia. Improvements to communications for such members includes giving information verbally as well as in written format, highlighting key points in documents, including diagrams,¹⁵ or offering communications with an adjustable font size or background colour¹⁶. But the benefits don’t stop in that greater neurodiversity on trustee boards will improve demographic representation– additional aptitudes associated with being neurodivergent include being innovative, productive, and good at problem-solving¹⁷.

A further benefit of having greater diversity is evident not just on Trustee boards, but on Independent Governance Committees (IGCs). As well as the previous points being applicable to these bodies, diversity can help with achieving Environmental, Social, and Governance (ESG) goals. Recently, concerns over where pension fund investments are held have become more of an issue for members. In 2019, the largest UK pension master trust confirmed that they “don’t see any future benefits…investing in the tobacco industry”¹⁸. The following year, the Universities Superannuation Scheme announced that it would not be investing in stocks relating to tobacco, coal, or weapons, after a campaign by members called ‘Ethics for USS’¹⁹. But some religious beliefs have made members more aware of this issue much earlier than this – Sharia funds have been used by Muslim members of Defined Contribution pension schemes to accommodate Islamic financial principles regarding ethical investment outside of alcohol, tobacco, gambling, weapons, or the finance sector²⁰, and since prohibiting its members from participating in the slave trade in the 1700s, the Religious Society of Friends (Quakers) have entreated their members to use investments as a “tool for positive social change”²¹. A diversity of backgrounds in an IGC implies a diversity of viewpoints, from which a greater understanding can be gained of how funds are invested affects ECG goals. For IGCs, these are fiscal decisions as much as ethical ones – the long-term concern is that as consumers become more aware of ESG issues with these companies, their revenues will become affected.

It’s not just a scheme membership that can benefit from having a diverse trustee board – employers can boost the reputation of their company. Especially for the younger workforce, workplace culture is a high priority when finding employment – in a 2018 report, 69% of those born between 1981 and 2000 confirmed that they were more like to want to stay longer than five years with an employer if they had a diverse workforce²². Studies have shown that a company is expected to be more prestigious, broadminded, and tolerant if it has a diverse workforce²³. Not only will this broaden the pool of potential employees, it will make the company more attractive to consumers and shareholders.

So, how do we improve diversity within these bodies?

Although it is an integral part of the role of trustees to act impartially, unconscious bias can’t be underestimated. Of course, unconscious bias training can try to alleviate this – but there is currently no clear evidence that such training has an impact on prejudiced behaviour or beliefs. The government has recommended investing in “initiatives focused around processes” instead²⁴.

Since the trustees are often chosen from the employees of a company – or chosen by those employees – the corporate culture around diversity directly affects the diversity of trustee boards. To ensure diversity within the company, employers need to change how they search for candidates. This includes posting jobs online where possible (rather than relying on referrals, as evidence has shown that our social groups reflect our own backgrounds²⁵), or using anonymous applications to ensure that we are not unconsciously biased by someone’s name. Employers should also begin mentorship programmes to improve the retention rate of a diverse workforce, and provide diversity training. Other ways to ensure diversity is to celebrate all religious and cultural holidays, create networks for particular groups, ensure that there is a robust, effective system for complaints relating to diversity, and introduce flexible working.

Employers should have specific targets to ensure that they represent as broad a spectrum of their employees as possible on trustee boards. Understandably, there are concerns that such targets could mean that people who are not suited to a role as a trustee will be chosen arbitrarily to meet these targets. However, quota systems have been used successfully in politics to ensure proper representation of populations as a whole – Belgium introduced a system in 1999 that now means that women make up almost half of their elected bodies²⁶. They have also been used to ensure equal representation of women in senior levels of business – legislation was introduced in Norway in 2003 that ensured a statutory percentage of women of 40% at executive board level, and is generally viewed as a success²⁷. Even once removed, targets tend to have the effect of challenging negative stereotypes, meaning that they can sometimes be used as a temporary measure to produce long-term change. When roles are successfully fulfilled by a diverse group of people, it can increase diversity by encouraging underrepresented people who might not see themselves being able to achieve those goals otherwise. Additionally, the targets would not need to be enforced in such a way that meant unsuitable people were trustees – it would just mean that when choosing between two equally qualified candidates, the one representing greater diversity would be chosen. And with the inclusion of independent trustees on many trustee boards, many of whom have much more experience and knowledge, the fear that some have that the trustee board will lack this experience and knowledge if they are in earlier phases of their careers can be alleviated somewhat. Where employers are choosing trustees from outside of the company, they should aim to ensure that these are also representative of their membership.

Employers and trustees are not the only ones who can step up to increase diversity – we must all, as pensions professionals, encourage diversity where we see it, and challenge barriers that get in its way. If we are a member of one of the protected characteristic groups mentioned in this essay, we should try whenever we can to get involved in decision making processes. And if we’re not a member of these groups, we should strive to support their inclusion.


¹‘Practical Diversity and Inclusion for Trustees’, Aon Solutions UK, 2020, p.6

²The [Mr T] Sippcentre SIPP (PO-18953), The Pensions Ombudsman, 29 June 2018

³New Airways Pensions Scheme (PO-28262), The Pensions Ombudsman, 08 June 2020

⁴‘UK heterosexual marriage rate falls to lowest on record’, Chiara Giordano, The Independent, 14 April 2020

⁵‘Female employment rate (aged 16 to 64, seasonally adjusted), Labour market statistics time series, Office for National Statistics, 23 February 2021

⁶‘Mothers ‘paying the price’ for career breaks’, BBC News, 08 March 2021

⁷Measuring the ethnicity pensions gap’, The People’s Pension, B&CE Holdings Limited, 2020

⁸‘Pensions: civil partnerships and same-sex marriages’, House of Commons Library, Djuna Thurley, 17 July 2019

⁹‘Judgement of the Court (Grand Chamber) of 26 June 2018’, EUR-Lex, 26 June 2018

¹⁰‘Gender recognition: Pensions and Benefits’,, January 2018, p.10

¹¹‘LGBT in Britain Work Report’, Chaka L. Bachmann and Becca Gooch, Stonewall, 2018

¹²‘Why Save Into A Pension?’, The Money Advice Service, 2021

¹³‘Guide to Communicating and reporting’, The Pensions Regulator, July 2019, p.7

¹⁴‘Neurodiversity in the workplace’, the Advisory, Conciliation, and Arbitration Service (ACAS), 2019

¹⁵‘How can I support my dyslexic employees?’, British Dyslexia Association, 2021

¹⁶Common adjustments that might be appropriate for a neurodivergent team member’, ACAS,2019

¹⁷‘Neurodiversity as a Competitive Advantage: Why you should embrace it in your workforce’, Robert D Austin and Gary P Pisano, Harvard Business Review, May – June 2017

¹⁸‘Nest quits smoking’, Nest pensions, 13 June 2019

¹⁹‘UK’s largest pension fund to sell out of coal, tobacco and weapons’, Mark Cobley, Financial News London, 1 June 2020

²⁰‘Money Pit Stop: I don’t have a pension because my work scheme isn’t Sharia-compliant, how can I save for retirement?’, THIS IS MONEY, 25 June 2019

²¹‘Ethical Finance’, Quakers in Britain, 2021

²²‘2018 Deloitte Millennial Survey’, Deloitte, 2018

²³‘In Good Company: When Gender Diversity Boosts a Company’s Reputation’, Leigh S. Wilton et al, Psychology of Women Quarterly, October 1 2018

²⁴‘Unconscious bias and diversity training – what the evidence says’, The Behavioural Insights Team, December 2020, p.4

²⁵‘Crossing Divides: The benefits of having friends who aren’t ‘just like us’’, Prof Miles Hewstone, BBC, 22 April 2018

²⁶Why quotas work for gender equality’, Güler Turan, OECD, 2015

²⁷‘Quotas and targets: How do they affect diversity progress?’, CIPD, June 2015, p.6

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Last update: 6 May 2021

Camilla O’Brien
Camilla O’Brien
XPS Pensions Group
Pensions Administrator

Interim Pension Officer/Manager - In House 18m FTC

Salary: £50000 - £70000 pa

Location: Northamptonshire

Pensions Administrator - W. Yorkshire

Salary: £23000 - £29000 pa

Location: West Yorkshire

Pensions Administrator - Hampshire

Salary: £20000 - £30000 pa

Location: Hampshire

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