Sharon Bellingham
Master Trust and IGC Lead.
This article was first published in October 2023 in the Pensions Management Institute (PMI) Aspects Magazine.
Earlier this year, the Pensions Regulator (TPR) published its equality, diversity and inclusion (ED&I) guidance for pension scheme governing bodies and employers.1 It offers a starting point for designing and implementing an ED&I strategy, focusing on key areas including inclusive member communications and trustee board diversity.
Increased focus on ED&I
As Louise Davey, TPR’s Director of Regulatory Policy, Analysis and Advice, articulated, “harnessing diverse views can help pension scheme governing bodies weigh issues in more detail and openly consider aspects important to those impacted by their decisions.”
Indeed, there are many workplace studies which show that diversity enables better decision-making and, as Louise went on to say, “all savers deserve to be in a well-run pension scheme that makes decisions in their best interests.”
In July, we saw TPR share its first ED&I survey, to gather views on diversity and inclusion, understand decision makers, and to determine what boards were doing to support members’ diverse needs. This valuable insight gained from reaching out to almost 100,000 trustees and board members will undoubtedly help shape further guidance.
The avalanche of consultations that landed ahead of summer recess included a call for evidence on pension trustee capability.2 Surprisingly, there was limited reference to board diversity, and instead the focus was on raising standards in trusteeship; the 2021 and 2022 TPR Defined Contribution surveys both highlight a need to raise the bar, and TPR has openly stated that its long-term vision is a smaller number of schemes, each with a professional trustee.
Once the territory of pension professionals in the Autumn of their careers, the professional trustee landscape has experienced a shift in recent years and, as highlighted by Isio:3 “Joining a professional trustee company is no longer primarily a late career option, and mid-career hires are becoming more frequent. In some cases, individuals are entering the job market for the first time as career trustees.” Isio’s report goes on to highlight that clients are increasingly turning to trustees to help meet diversity objectives.
Notwithstanding that trustee recruitment is a challenge against the growing pressure of an increasing (and complex) regulatory environment, lay trustees perform valuable roles and bring fresh perspectives gained from a broad range of backgrounds. Their voice at the table is important – they add considerable value to decision making and overall board diversity.
TPR guidance has reiterated the importance of the Chair in driving and promoting ED&I; it’s the Chair who sets the tone for open and inclusive discussions and how ED&I is embedded into the culture of a governing body. Although a Chair will also direct meaningful action towards collectively agreed objectives, all trustees must play a part and support progress against those objectives.
Successfully embedding ED&I
ED&I will mean different things to each of us, in a personal capacity as well as professionally. It can include everything from meeting the needs of members who are neurodivergent with conditions like autism, women, ethnic groups, the LGBTQ+ community – and much more.
The Scottish Widows Master Trust has already made significant strides in this area and successfully embedded a wide-ranging and comprehensive ED&I framework, which goes above and beyond the regulatory guidance. ED&I is embedded across our culture, governance, product design, support for our members, how we communicate, and the overall experience members receive.
Being part of a purpose-driven organisation like Lloyds Banking Group puts us in good stead, and we benefit from in-house training, guidance and support, as well as learnings shared by our well-established colleague networks and third-party partnerships. This is not just something which is unique to large organisations such as ours, however, many workplaces have embedded ED&I into their corporate governance frameworks and operate similar initiatives.
Trustee boards should look to engage with their Sponsor and understand if there are ways in which similar support may be leveraged; diversity network groups, for example, are an invaluable resource, providing knowledge and experience which we can learn from, and can help increase awareness of what can be done better.
It’s important for us all to understand who our members are, in order to make what we do meaningful to them. As part of a programme of steady activity, we regularly engage with our members on a range of topics; in our most recent survey we explored ethnicity, religion and disability and we continue to build our understanding from the insights our vulnerable customer strategy provides, as well as wider Census and Office for National Statistics overlays.
In setting ourselves up for success, we considered three simple principles:
- Be clear on what ED&I means.
- Be specific, set goals and measure success.
- Be intentional, purposeful and mindful.
Our ED&I framework has also been developed around three main pillars and within each sits objectives and an action plan:
- Inclusive governance;
- Inclusive operation and design; and
- Inclusive insight and behaviours.
The trustees’ ED&I policy underpins everything and underlines the strategic aims, beliefs, risks, opportunities and broader principles, as well as how ED&I is incorporated into everything we do. It also outlines how the trustees operate as a board and the expectations they set for their providers, suppliers, and advisers.
Until we all take action, ED&I remains a concept and embedding it is as much about social responsibility as it is fairness in pensions. It’s incumbent on all of us to ensure savers are part of a well-run pension scheme which supports their best interests, no matter who they are.
Notes to Editor
[1] According to The Pensions Regulator, Guidance launched to help improve pension schemes’ equality, diversity and inclusion.
[2] According to gov.uk, Pension trustee skills, capability, and culture: a call for evidence.
[3] According to Isio, Isio’s 2023 Professional Independent Trustee Survey.