Having a diverse trustee board is essential as it can bring a wider range of perspectives and new ideas which is invaluable to the decision making process of any pension scheme. “If we want younger people to start saving earlier, maybe we need younger people involved in pensions at a higher level".
The benefits of improving diversity of trustee boards and other governing bodies is the ability to work more efficiently and collectively, offering different opinions and suggestions to aid problem solving and improve member outcomes throughout their retirement journey.
The key to achieving great diversity and inclusion is “to make small but significant steps on a regular basis… that requires constant monitoring” . By reviewing and improving the trustee selection process, conducting annual assessments on the trustees as individuals and a collective, and regular training, trustee boards can remain fresh and ahead of ‘hot topics’ within the pensions industry. It would also lead to an increased number of potential trustees stepping forward.
Annual trustee appraisals allow the trustee to voice any concerns, opinions or to advise of any areas of improvements they would like to see in their pension scheme. For example, offering choices in Shariah compliant funds to encourage and welcome a more diverse membership and make pensions more inclusive. Improving diversity can help trustees become more proactive and collaborative, ensuring forward thinking and progression. It is beneficial to have a broad spectrum of characteristics and attributes across the board and this can be achieved by appointing both professional and member-nominated or employer-selected trustees.
A positive step in improving diversity in this area is to portray to members a demographic diversity, encompassing a wider range of individual differences, including more female representation, race, ethnicity, disability, age, socio-economic background, and education. Members will feel more valued, represented, and engaged, making the pension scheme more attractive than its competitors. Diversifying trustee boards and other governance bodies in pensions reflects the real world and acknowledges members’ different needs. It can also aid in healthy debates and tackling ideas in unique ways to help productivity in key areas such as strategy and governance.
Awareness of neurodiversity can even embrace the diverse ways of thinking, learning, processing, and behaviour would allow trustees to address the operation of pension schemes to ensure it does not have a negative impact and supports and assists its vulnerable members. Trustees should implement ways to identify differences, which may not be immediately apparent, such as processing or cognitive differences to enable effective interaction with vulnerable members and provide them with the service and information they need. Improvements to communications would help to build and maintain trust and respect and create a sense of belonging and understanding.
ESG and Climate Change has been at the forefront of most discussions and future planning. By taking steps to ensure diverse cultural perspectives across trustee boards and the new generation of pensions professionals, the pensions industry as a whole can drive forward innovation. Cultural sensitivity, knowledge and insight would be extremely useful in a trustee board or governance body and can be achieved by appointing people who have a broad range of backgrounds, life experiences, skills, and expertise to create more awareness of ESG factors, prompting wider discussion and ultimately better outcomes for members.
It should be recognised that diversity should not just be another tick boxing exercise but is an ongoing process of good practice and there should be a real desire and excitement to achieve this. Gone are the old days of the traditional white, university-educated all male trustee board and welcome to the next generation of pension professionals, adapting as quickly as humankind is advancing by challenging their own beliefs, intentions, and ideals. There is no higher value than diversity and being able to learn from each other, which in turn allows for greater ability to relate to member, clients, and prospective clients.
¹Craig Rimmer, PLSA - *where and when
²PLSA Diversity & Inclusion – Made Simple Guide (March 2020)
*Barnett Waddingham and Winmark Pension Chair Remuneration Report – September 2021
Last update: 29 July 2022
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