Why does diversity matter?
Because it does. We as an industry are responsible for looking after the occupational retirement savings of a complete cross section of people across the UK. To ensure that we are advising, or making decisions, in the best way we can, we must try to understand as well as possible the range of perspectives and needs of those savers.
For scheme trustees, The Pensions Regulator (TPR) has made it clear in its July 2020 blog statement, and in response to its 2019 consultation on the Future of Trusteeship and Governance, that it believes that more diverse and inclusive teams drive better results, and that diverse boards make better decisions.
Pension trustees have a general trust law duty to take all relevant factors into account when making decisions. If a board isn’t truly taking steps to understand and represent the diversity of its membership, can it be said to be taking all relevant factors into account?
So what can we do?
1. Stop making excuses
The results from the Pensions and Lifetime Savings Association (PLSA) survey in December 2020 show that a majority agree that greater diversity is vital – but few have any plan in place to address this. The first barrier to break is immediate defeatism. Yes, the diversity of our industry will not improve overnight, but not trying is not going to get us anywhere either.
Many in the industry complain that it is hard to get people interested in becoming trustees. But when you probe more deeply, it may be that a board is turning out the same paper-based trustee nomination communication that it does every four years and no one can remember when it was last reviewed, let alone revised. Change will require thought and action.
2. Review the way we talk
As much as we all may try to claim otherwise, pensions does not top the list of sexy and dangerous topics. We are an industry that could be accused of being stuck in the past, in paper and jargon. We expect the world to speak our language, rather than accepting that perhaps there may be things we can do to be more relevant and accessible in the modern day.
I’m not suggesting that we should all start releasing pensions based TikToks (please, no), but are we making proper use of the spectrum of modern media available to us? Are the images we use representative? Perhaps we should put more consideration into what our output looks like to the recipient?
3. Working within the limits of the law
Pensions law does restrict the ways in which you
can pursue diversity among your trustee board. As one-third of a board must be appointed by the members, and the remainder are often appointed by the employer, boards cannot be fully in control of their own make-up. However, trustees can try to ensure diverse nominations and, therefore, diverse appointments, through open discussion with the employer, and a review and shake-up of their member nominated trustee communications and processes. Of course, even with this action there are limits as to how diverse a board can be, as trustees can only be as diverse as the membership of the scheme in question.
Employee forums, ‘meet the trustee’ days or videos, information highlighting career benefits of being a trustee, and a move to selection over election, when utilised, have achieved improved board diversity for my clients, equipping them with the mix of skills, knowledge and perspectives that TPR sees as vital to good governance.
4. Ask for feedback
Alternatively, some boards have created member engagement panels to encourage feedback directly to the trustees from a broader range of the membership. This provides the board with direct access to member views and concerns, and encourages dialogue and awareness beyond what is achieved simply by the presence of member-nominated trustees.
5. Create an inclusive environment
To prevent there being unconscious barriers in place, we should ensure that environments are supportive and flexible. One positive from 2020 should be that attending meetings by video remains on the table, circumventing some barriers posed by, for example, caring responsibilities or access for those with disabilities. Social events should be varied to appeal widely. It’s not to say that no one can go for a pint anymore, but rather recognising that your routine may, unconsciously, be excluding others.
6. Encourage diversity of thought
This is the real key, for trustees and advisers. As diverse as you may be, if you are not allowing everyone to speak and be heard then you will fall at the final hurdle. On a trustee board, this can be supported by a strong chair who invites and encourages all trustees to participate in discussions.
This is not a quick fix issue and there are no easy solutions. But together we can continue to talk about it, and share ideas, to ensure this is kept high on our list of priorities. It’s our responsibility to ensure we are doing the best we can to represent, and produce the best results for, pension savers. 20
This article was featured in Pensions Aspects magazine February 2021 edition.
Last update: 4 February 2021