Trustee boards are making inroads with social mobility and gender inclusivity
Pardon the Interruption
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mallowstreet’s second annual Equality, Diversity and Inclusion Report 2023, produced in partnership with Cardano, highlights the challenges schemes face in improving diversity and inclusion on their teams and boards, and the policies they are adopting to advance the EDI journey.
Better representation for women and state-schooled trustees but more work needs to be done
Nearly half of pension professionals note that at least 80% of their board members attended government-funded or state school. Additionally, 59% say that less than one in five members of the board were privately educated. This reflects that the pensions industry is doing well providing opportunities for people from less socioeconomically privileged backgrounds.
Many pension funds are also improving the representation of women on trustee boards. While on average, women comprised less than 20% of trustee boards in 2022, a growing proportion now report that women comprise a greater proportion of board members.
However, trustees are making less progress recruiting talent from other underrepresented groups, particularly those from a minority background as well as neurodivergent and disabled people.
Developing a pipeline for succession planning can help with recruitment and retention
Turnover is slow on many trustee boards, especially for nominated trustees, who typically serve in their roles for over seven years. The main benefit from this is that long-standing trustees tend to be highly experienced and familiar with the scheme and sponsor. Yet without a plan to foster emerging talent, schemes risk losing this valuable knowledge as trustees retire.
The Pensions Regulator (TPR) sets out useful actions trustees can take to minimise this risk in its diversity and inclusion guidance. One idea proposed by TPR is for pension funds to adopt fixed-term appointments for nominated trustees. Schemes can also develop new talent by staggering turnover of roles, which in turn gives more time for new trustees to learn from their more experienced peers.
Scheme boards are taking a variety of steps to improve EDI
Two out of five UK pension funds and trustee firms have held an annual meeting to identify existing knowledge or skills gaps on their team, as well as conducted diversity and inclusion training.
Over a third of schemes and firms have also taken additional actions like agreeing a definition of EDI with their board and reviewing TPR’s guidance. Another 38% have made member communications more inclusive, which shows how improving EDI can extend beyond the composition of one’s team or board.
So why is embracing diversity and inclusion so important for the pensions industry?
Commenting on the insights explored in our second annual EDI Report, Gillie Tomlinson, Head of Trustee Engagement for Cardano Advisory, said:
As the importance of equality, diversity and inclusion continues to rise up the agenda, we are seeing a growing appreciation of its benefits among schemes and trustees alike. The increase in both target and strategy setting in this year’s research is indicative of the pension industry’s growing commitment to fostering robust policies and driving positive change.
However, despite this momentum, there remains a substantial and persistent EDI gap that requires attention. Succession plans should prioritise EDI, and we need a concerted effort to attract diverse talent across the industry.
