For some trustees, maybe diversity was felt to be a minimal risk because this area has already been addressed. However, the 2020 edition of the Winmark Pension Chair Remuneration Report (the Winmark Report), found 63% of respondents felt trustee boards were not diverse enough in terms of age and 55% of respondents felt the same about gender.
The Pensions Regulator’s (‘TPR’s’) own research has found a “strong correlation between gender-diverse trustee boards and those boards which score highest against [their] measure of quality governance”. Given this and TPR’s clear statement in its recent 15-year strategy, that diversity amongst those making decisions on behalf of savers is expected, it is disappointing that diversity appears to be low down the list of priorities for many trustees. There will always be other issues on the agenda and for many trustees employer distress and market volatility have overwhelmed other considerations this year; but what might they be missing?
TPR notes that “unconscious bias can lead to an environment which stifles fresh thinking or approaches and a failure to properly recognise issues that have a real-life impact on savers’ outcomes”. Could some trustees have a blind spot that means they are unable to see the benefits a diverse board can bring, despite evidence to the contrary?
Recognising that there is an issue is only the first hurdle. The next step is actually taking action to address the situation. The Winmark Report found that Trustee Chairs continued to look for increased diversity, particularly by age and gender, but that there was no evidence of any positive movement in this area over the last 12 months. Lack of candidates coming forward was cited as the main barrier.
My personal view is that improving board diversity should be a top priority for the pensions industry as a whole. I hope that TPR’s diversity and inclusivity working group will provide some valuable guidance and impetus to help jump start diversity and inclusion in trusteeship, building on existing initiatives like NextGenNow and the Young Pension Trustee Network. In the meantime, given that a lack of candidates coming forward is being cited as a major obstacle, a review of the recruitment process might be a good place to start. The Pensions and Lifetime Savings Association’s `Diversity & Inclusion: Made Simple Guide’ offers practical steps for trustee boards to help promote greater diversity while waiting for more developments.
This article was featured in Pensions Aspects magazine February 2021 edition.
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