Following its action plan published in September 2022, the Pensions Regulator (TPR) issued its guidance on equality, diversity, and inclusion (EDI) for governing bodies and employers in March 2023.

It has followed this up with a diversity survey to find out what trustee boards are actually doing about it.

While we await the findings from the survey, let’s take a deeper dive and think about how trustees can implement this guidance to make sure it’s not just a tick-box exercise and that it actually achieves the desired outcomes.

There is of course the purely human case for more diverse representation on trustee boards, but having people in the room from different backgrounds and experiences can result in a greater breadth of ideas, constructive challenge, and ultimately better decisions – leading to better outcomes for the scheme members the boards represent.

It is understandable that when it comes to EDI, the focus is on representation – most commonly gender, race and age. After all, this is what we see when we look at the people sitting at the table around us.

Increasing diversity with regards to representation of these characteristics, and indeed of all nine protected characteristics set out in the Equality Act, is of course critical to the principles of EDI from an ethical and human perspective – it is the right thing to do. But once we have everyone in the room, how do we include everyone, equip everyone to contribute to their full potential, and achieve those better outcomes we are striving for?

TPR’s guidance sets out practical steps trustees can take in areas such as recruitment and reasonable adjustments, as well as detailing its expectations of the role of the chair in promoting EDI. TPR describes these as “quick and easy steps that some schemes can and should take to improve EDI now”. However, perhaps real and effective change requires more investment.

To make the biggest impact, trustee boards need to look below the surface and dedicate sufficient time and resource to embedding EDI principles in their culture.

Here are some areas where trustees could benefit from diving deeper:

• Dedicating time for EDI training: do you really understand your unconscious biases and how these can impact not just human interactions, but financial decision-making?
• Considering scheme-specific context: a defined contribution scheme with a young membership will have different priorities to a mature defined benefit scheme approaching buy-out – factor this into your EDI policy.
• Skills and diversity analysis: TPR provides a template for assessing soft skills, technical skills and experience on a trustee board. Consider also looking at protected characteristics, education level, seniority at work, and socioeconomic group – seeking external assistance to do so anonymously if need be. Use this information to inform succession planning.
• Engaging the sponsoring employer – they may have flexibility and agility to address representation on the board more immediately, by appointing employer-nominated trustees.
• Engaging your advisers – how do their EDI policies and practices help ensure they bring the best ideas to the table for you? Trustees have power to influence their advisers if their EDI aims are not aligned.
• Think about the member experience – do you really know your membership? Given they will primarily interact with scheme administrators, what is the member experience like for vulnerable or diverse members?

Our expert pensions team can provide training and support on implementing EDI policies. Please get in touch for a chat.

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